Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Orders of the Day — FINANCE BILL

Order for Third Reading read.

11.5 a.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling): I beg to move, That the Bill be now read the Third time.
The difficulty with this particular stage of the Finance Bill is the usual one, namely, that broadly speaking we are confined to what is contained in the Bill and that the contents of the Bill have been thrashed out in detail more than once in the course of the last few weeks. Perhaps I could start by saying a word or two about the course of the Bill to this stage. It is a large Bill, a substantial, thick document, and there is great detail in it, making some very large changes in the taxation law. I think it a good thing that it passed so smoothly and in very reasonable time.
I must apologise for the variety and number of Amendments we had to place on the Notice Paper earlier. That was because we were taking the closest possible account of the various representations made to us while the Bill was passing through. I should like to thank the Opposition for the courtesy and restraint of hon. Members opposite throughout the passage of the Bill. This has not stopped them from making some pretty trenchant criticisms at various hours of the day and night on features of the Bill of which they disapproved.
As the entire work of carrying the Bill through Committee and Report fell on the other Treasury Ministers, I pay tribute to them for all the work they have done. I particularly commend the work done by the Financial Secretary, the Economic Secretary and the Solicitor-General. They served the House well, and I appreciate their great courtesy and diligence and am most grateful for what they have done.
The main contents of the Bill fall under two heads. One is the abolition of Schedule A, a major change in the tax structure, to which I shall not refer again as it has been discussed many times in the course of the last few weeks. For the rest, the Bill had the theme, which I have tried to follow both in the Budget and in the Finance Bill, of assisting, in practice, towards a more rapid and more steady rate of expansion. The Income Tax reliefs, capital allowances, the new system of free depreciation in development districts and stamp duty changes were all designed to stimulate demand in the economy, but to do it in such a way as to increase efficiency and promote a steady rate of expansion.
It is, of course, too soon to see any of the effects of this Finance Bill because, broadly speaking, none of the release of purchasing power involved has begun to take effect. The Income Tax reductions will not take effect until early next month and, as for the change in capital allowances, they will take some time to show an effect in revenue or company accounts, but changes both in the psychology in industry and in investment by businessmen are already becoming visibie. This naturally is a slow process. The movement and trend of private manufacturing investment must be a fairly slow process. It is not something which is rapid or should be rapid or erratic. We must expect to see fairly slow movements but, one would hope, fairly steady movements.
On the other hand, the economy is clearly reacting to earlier measures. After the very substantial increase in unemployment during the winter, we have had in the last two months a very sharp fall indeed in the level of unemployment, which, I think, now stands out clearly as a structural problem—not a general problem, but a problem confined to certain areas of the country, for instance Scotland, Ulster, the North-East and Merseyside, where it is still important. That is why I think I was justified in concentrating help on regions of high unemployment.
So far the new system of free depreciation, coupled with the new standard grants which arise from another Bill—the combination of these two—has already produced a very keen interest among


businessmen in the prospects of investment in the development districts. I am sure it is the wish of the whole House that this keen awakening interest should soon show itself in factories being erected and jobs being created.
I conclude, in commending the Bill to the House, by saying that we are now seeing an expansion of the economy; and our essential task must be to ensure that the expansion is as rapid as is consistent with an avoidance of a return to inflation and with maintaining a rate of growth in the steadiness of which business men can have confidence.
The Finance Bill and the Budget range over the human, physical and financial factors in a growth policy, and, as the House knows, the work of the National Economic Development Council and the discussions we have had on that body are reflected quite considerably in the structure of this year's Budget.
For the future, I have no doubt that things are entirely in our own hands. We have the ability as a country to establish and maintain a more rapid rate of growth. The national conditions are such that this can certainly be done, provided that we are prepared to match enterprise with restraint.

11.10 a.m.

Mr. James Callaghan: The Chancellor made his speech very cogently and succinctly. Last year, I congratulated the then Chancellor on what he had done. I think that I had better beware. A week after my congratulations, on 4th July, he was out of office. I do not know whether any words of mine will have any effect on the Chancellor's position this year. Of course, he need not necessarily be out of office. I suppose that there could be other changes. Anyhow, I forbear from congratulating him, and I would not wish to influence any internal deliberations at all.
The Financial Secretary has been most diligent, painstaking and courteous in everything he has said. As for the Economic Secretary—I do not see him in his place; no doubt, he is recovering from his weary vigil or, perhaps, planning and plotting more evil schemes somewhere in the bowels of the Treasury—I have never met anyone who

was more resolutely determined to find swans in other people's geese. He has bemused us all by his desperate attempts to find good where most of us could see only mediocrity. The Solicitor-General has been urbane and courteous. The Chief Secretary has been himself.
As for my hon. Friends, I must say that my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has performed his usual feat. I said last year that, if he ever gave up drafting Amendments, I was not sure what would happen to the British constitution. What I say this year, after a further 12 months' experience of him, is that I know of no greater expert in Parliamentary draftsmanship in the House. He has, over the last 10 years, won for himself a reputation which is acknowledged in all quarters of the House. It is a saying among us, when we want to find some obscure way of getting round the Government's intention, "Give it to Dick". He has performed most valiantly again on this occasion.
My hon. Friend the Member for Sowerby (Mr. Houghton) combines pugnacity with a passion for purity in public taxation. It is a combination which is most refreshing to everyone. My hon. Friend the Member for Gloucester (Mr. Diamond) has, of course, a deep knowledge of the City. My hon. Friend the Member for Grimsby (Mr. Crosland), who also has helped us on this occasion, is not here today because he is finding out in Japan how the Japanese manage to succeed in stimulating a much faster rate of growth than the Tory Government have ever done although faced with rather similar problems. No doubt, he will come back with some proposals about the way in which we should go about it.
This has not been an exciting Bill. I think that most of us would say that it has been a very dull Bill, despite attempts to engender heat at various times. Probably, the main effect has been to undo a lot of the damage which was done last year. Last year, we added another £289 million to the nation's burdens by the Finance Bill. This year, we are relieving the nation of £260 million through the medium of this Bill. We are, so to speak, "as you were". We have gone back to where we were more than a year ago.
I agree with the Chancellor when he says that we cannot expect to see any quick results from the increased capital allowances and free depreciation in development districts. This is all the more reason for regretting that the Amendments were not accepted when we moved them 12 months ago. We might then have seen the delayed effect coming in now, instead of having to wait a further period. The Chancellor has resisted a further Amendment this year which we moved in connection with these allowances, which, I am willing to warrant, stands a pretty good chance of being proposed next year, together with certain other Amendments.
I am glad that the Chancellor has adopted the system of discrimination in allowances. By themselves, as I think he will agree, the allowances will not achieve a great deal. They must be resolutely applied in conjunction with other Government Measures and executive actions, but they are a very useful addition to the nation's armoury in handling our situation. Anomalies will crop up, no doubt, but I do not think that we need fear them. We can look at them as they come along.
Now, Schedule A. It took us 19 Clauses and 7 Schedules to get rid of it. It was unloved by owner-occupiers, abused by accountants, and mourned only, I think, by my hon. Friend the Member for Sowerby and, perhaps—let us be fair—by those who regard the British tax machine as one of the best fashioned instruments of taxation in the world, although it is getting rather old-fashioned and out of date. The fact that some part of the tax base has been eroded has undoubtedly caused a certain amount of perturbation among those who regard the taxation instrument for its own sake.
The abolition of Schedule A will cause anomalies for those who rent accommodation, either because they cannot afford to buy or because they do not choose to buy because their occupation requires them frequently to move about, or whatever it may be, and I wonder whether we shall, as a result of the abolition, have the growth of demands for allowances in respect of rent. On grounds of logic, I think that it would be extremely difficult to deny them. Whether any Chancellor will feel able to take such a step, I do not know. If

we do start to give allowances in respect of rent, there will soon be no limit to the number of things in respect of which we shall be pressed to give allowances—railway fares and everything else which bears heavily on the citizen.
Although there is no doubt that the Chancellor has done it for political reasons—or his predecessor announced it for political reasons and it was spatch-cocked into the Budget—there is a lesson here. When one does these things purely for a political purpose, one does not necessarily reap the reward in respect of votes. I have not seen any marked intention on the part of the electorate to rush to the Conservative Party because Schedule A has been abolished.
What I regret is that the decision to abolish Schedule A has not been the occasion for further reforms. I am a resolute tax reformer. I believe that the British tax system, well designed though it was originally, has become outdated and needs radical reform in many aspects, on the earnings side, on the capital side, on the profits side and on the Estate Duty and inheritance side. We have heard in the past from the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd)—he is not in his place now—of his proposals for tax reform, but we have not seen or heard anything about it, as far as I can remember, from the present Chancellor. One of the best things we could do in in this connection would be to embark upon a large-scale reform of the tax system, and I should like to see a determined effort made in that direction.
I welcome the increase in personal allowances. The £15-a-week married man with one child will have about 5s. a week extra pocket money. Of course, he will have to pay more for National Insurance. He has already had his bill for increased rates. Motor car insurance premiums are to go up by 30 per cent, in the autumn. I have a suspicion that there will not be much left out of his extra 5s.a week spending money by the time the autumn comes. And, of course, prices are going up. If there is any general criticism I make of the Finance Bill, it is that it does nothing, or very little, on balance to help the ordinary family man. Such increase in spending money as he has been given,


which is, as I say, minute—the ordinary family man has been given a minute increase in the amount of his spending money—has already been mortgaged by prospective increases in the price of insurance premiums and other dues which will fall upon him. Therefore, it has done little to improve the standard of life or the condition of the great mass of the people.
Of course, it has done something to help to improve the condition of life of those, represented here again on the back benches, who were so vocal at 3 o'clock the other morning on the subject of the repeal of the Stamp Duty. They will benefit to the tune—not them personally, but those on whose behalf they speak—of some £25 million. Well, as I say, we have to choose our own sense of values and to decide what we think most important. Frankly, I do not believe that it is very important to relieve the Stock Exchange of £25 million when there are a great many other things which need doing more urgently. But the Chancellor has chosen to do this and, in doing so, has revealed his approach to these problems. The other day I read—I am sure that the Chancellor did not say this—that he was a little worried because he had no enemies. He need not worry. He has plenty of enemies on this side of the House. We shall fight him as hard as we can and do our best to expose the policies being followed by the Conservative Party and by the Government at the present time.
I doubt whether the Government have much more time left ahead of them. For the sake of Britain I hope that they have not. I agree with the right hon. Gentleman that, were we able to unleash the energies of the British people, there are no heights of which we are not capable. I believe that this country could be transformed in 10 years with a good Government and I regret that we have wasted the last 12 years and that we have been left in a position where we have the Chancellor making an oration of this sort and telling us what we can do in the future. The British people would be inclined to ask why he has not done it in the past.

11.22 a.m.

Sir Henry d'Avigdor-Goldsmid: Generally speaking, I

think it more agreeable to discuss these matters at the pleasant hour of 11 a.m. rather than 3 o'clock in the morning. At 3 o'clock in the morning the hon. Member for Cardiff, South-East (Mr. Callaghan) had lost some of the geniality which we find such an agreeable feature in the daylight hours. I wish particularly to address myself first to a few of the hon. Gentleman's remarks at 3 o'clock in the morning. He said two things to which I wish to draw attention. He referred to the City of London and said:
Undoubtedly, the City of London can on occasions operate against the interests of British industry."—[Official Report, 27th June, 1963; Vol. 679, c. 1577.]
I suspect that the hon. Gentleman was thinking in terms of a return to the gold standard of 1926 which in fact caused great unhappiness, great deflation, but was not, I think, done on the lines to which the hon. Gentleman was referring.
I should like to ask the hon. Gentleman whether he thinks that any action taken since the deflationary Bank of England was carpeted by the Treasury—which was after the nationalisation of the Bank of England—shows that this particular antithesis had been reached. My own feeling is that he will find it difficult to prove that since the Bank of England ceased to be an independent entity the City of London has taken any action other than of a helpful sort towards British industry. If we are going back to such ancient history as 1926, I wonder whether much useful purpose is served—if any at all—by making it a debating point at 3 o'clock in the morning in the year 1963.

Mr. Callaghan: Would the hon. Gentleman like me to answer that now?

Sir H. d'Avigdor-Goldsmid: Does the hon. Gentleman wish to interrupt me?

Mr. Callaghan: I shall be glad to take up that point immediately. During the 1950s, whenever we ran into monetary troubles it was the interests of the City of London which were placed ahead of the interests of British industry. That was the whole foundation of the stop-go policies. I refer specifically to 1957. I think there is no doubt that what took place in 1957 meant that the interests of British industry were being subordinated to an out-dated monetary policy, basically in the interests of the City of London. I think that modern methods


adopted over the last 18 months have proved of assistance, but I do not have to go back to 1924.

Sir H. d'Avigdor-Goldsmid: I still do not know of any action taken in 1957 which was not designed to be beneficial to British industry. I am absolutely convinced about that.
The other point which the hon. Member made, and on which he animadverted, was that some of my hon. Friends had addressed themselves with particular interest to the question of Stamp Duty. My hon. Friends are capable of defending their own interests, and they are well known as diligent industrialists. I do not see why the hon. Gentleman should have said in reference to my hon. Friend the Member for Halifax (Mr. Maurice Macmillan):
The hon. Gentleman shakes his head, but it is the only matter on which he has bothered to speak."—[Official Report, 27th June, 1963; Vol. 679, c. 1574.]
Over the last five, six or seven years, I have sat through a great many of the debates on all stages of the discussions on the various Finance Bills. I value Finance Bills in inverse ratio to the number of interventions which I make. That is to say, the better the Bill the less need there is for me to talk about it. In respect of this Bill, were I to work out an equation showing the ratio between my Finance Bill "Chamber hours" and my "intervention minutes," I think I should find that I had the highest average of anybody of the time I spent sitting on my bottom compared with the time when I stood on my feet. The hon. Gentleman may think that I have a due appreciation of my own limitations. But I prefer to think that it is generally recognised that we have had a good Finance Bill; and the fact that my hon. Friends did not find it necessary to speak more than on a few occasions is an additional recognition that the Bill was so well drafted that it carried out the intentions of my right hon. Friend the Chancellor.
There is one point upon which I should like to join issue with my right hon. Friend, and that refers to the question of Schedule A. Last year my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) indicated that he had intentions with regard to Schedule A to be implemented in 1963. I should have thought that this

would have given the Inland Revenue a whole 12 months in which to work on this undoubtedly complicated problem. Yet, when it came to the point, we found that we had a volume of Amendments relating to Schedule A which we had to face at very short notice. With a very few exceptions, I do not think that hon. Members on the back benches are capable of absorbing this kind of detail in the time afforded to us to do so.
I make no objection of any sort to the changes which were made resulting from arguments raised during the Committee stage discussions. But I think that the entire redrafting of very large Schedules is something which an ordinary back bench Member cannot deal with in that way. I put it to my right hon. and hon. Friends that most of the lustre which they gained in our eyes because of their clear and lucid presentation of the arguments was slightly dimmed by the fact that, with the best will in the world and having done a fair amount of homework, it was quite impossible to follow all the arguments which were raised. We spent a lot of time in Committee, and I wonder why we could not have had sufficient time to digest the Amendment on Report. Year after year there is something about which we grumble. This year, I think we had something over the odds about which to grumble, particularly in relation to the Schedule A matter.
We have had a sound Finance Bill following a good Budget. I cannot understand how the hon. Member for Cardiff, South-East can be prepared to say that all the benefits which have been added to the purchasing power of the individual, who has gained so widely from my right hon. Friend's tax reliefs, will be lost in the future rise in prices. If he is referring to his own intended return to power, that is one justification I can see for any future impending rise.
If the hon. Member for Cardiff, South-East becomes the Chancellor, I believe that we shall see that rise. If he does not, then the interests of this country will be extremely well served by this Government and this Bill; and special credit for this must go not only to my right hon. Friend the Chancellor but to my hon. and right hon. Friends who have supported him. Whatever the hon. Member for Cardiff, South-East meant


by his references to the Chief Secretary, for my part I have valued my right hon. Friend's speeches on the Bill and I prize the efforts of the Chief Secretary, the Economic Secretary and the Financial Secretary in (having made valuable contributions to the Bill and having eased its passage substantially.

11.31 a.m.

Mr. Harold Lever: I am not in a position to make the claim of the hon. Baronet the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) as to the ratio of sitting and speaking time. However, I can assure both my hon. Friends and hon. Members opposite that their remarks do not escape my diligent perusal, even though I may not always be physically present in the House. Since the hon. Baronet's remarks in this connection seemed to be acceptable to the House, perhaps I might be allowed to say that in my case it is simply that I am rather more slow witted than the average hon. Member and that it takes me a great deal of time to absorb what is said on certain—particularly the one he discussed—subjects.
It is reassuring to some hon. Members to learn that having attacked the father, the hon. Baronet defended the son. Although I do not wish to emulate myhon. Friend the Member for Cardiff, South-East (Mr. Callaghan) by entering the cauldron of discussion on Conservative Party politics, it is somewhat reassuring to learn that the hon. Baronet finds something good in at any rate one right hon. Member of the Cabinet and his doings. I wish that I could share his view.
I wish today to protest briefly about three aspects of the Budget which disturbed me greatly. The first is Schedule A, which I have examined in more detail at an earlier stage. The abolition of Schedule A is to be deplored as an act of irresponsible Poujadism designed to appeal to the owner-occupier elector at the expense of the general taxpayer. Much as I value the presence of the hon. Member for Orpington (Mr. Lubbock) in the Chamber, this alteration in our tax law was too high a price to pay for his arrival here because it represents a re-

versal of the decision of the electors of Orpington; and we are witnessing that rather than a rational alteration in tax policy.
I would gently chide myhon. Friend the Member for Cardiff, South-East by reminding him that the only distinguished mourner of this part of our tax law is my hon. Friend the Member for Sowerby (Mr. Houghton). It is lamentable that a perfectly sound principle of our tax law—which attempted to produce some equalisation between the owner-occupier and the concessions available to him by way of tax reliefs and the tenant—should be disappearing. This part of the law did produce at least some remedy. It was not an exact remedy and it by no means achieved perfect equity, but it was a rough and ready method of getting some equality. My hon. Friend the Member for Cardiff, South-East is now compelled to examine the bringing into being of another equaliser because this one has been abolished. My hon. Friend may have to think of a less satisfactory type of equaliser, perhaps the question of subsidising tenants in some manner in a general sort of way. As I say, it is a pity that the Government have taken this action, for it is not only indefensible but, in principle, it is distasteful.
Anyone is able to show in about 10 minutes that our present tax system is manifestly unfair in its impact on the owner-occupier, who is allowed tax relief on the money he borrows to buy his house, and the tenant, who gets no relief for the rent he pays. The complacent way in which these anomalies are accepted is deplorable and I cannot share the belief that there is something sound and logical in our tax system.
It rather resembles a mid-nineteenth century locomotive trundling along, parts having been taken out of it and replaced by others, there being a general muddle as a result of the thing being interfered with. The machine is encrusted with new devices so that it does not have the reputable simplicity it had in its original form. Instead it clanks along, a museum piece, and in every part of it there is a clanking of apparatus. It is high time that we had a more modern machine.
I wish also to lament a similar indefensible piece of legislation concerning


luxury cars. The Government should make up their mind whether they wish to penalise those who buy cars in excess of £2,000 simply because they cost more than £2,000 or whether they wish to amend the rule that expenditure in a business shall be allowable for tax purposes if it is reasonable. Or do the Government prefer to institute some new rule where there is a fixed flat limit, above which anything is luxurious?
The Government originally fixed such a rule and said that a tax allowance would not be given on a vehicle costing over £2,000, whether rented or purchased. They now appear to be trying to climb back to the original, more logical tax principle but, unfortunately, they are doing it in a half-hearted way. The result is neither a Government of austerity nor one of logic. It is lamentable that the Government should manoeuvre their tax rules not in the fiscal interests of the nation but because of the electoral fortunes of the time.
I must return to the question of Schedule A to make it clear that I appreciate that the Chancellor had no choice of action. He was committed by his predecessor, the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd), who took the extraordinary step of promising, before Parliament had even considered the matter, let alone pronounced in favour of its abolition, to make the change. The former Chancellor promised that a change would be made and thereby committed the future Chancellor to changing it without being able to consider the matter on its merits or how it would fit into the Budget.
I listened with interest to the comments that have been made about the City and Stamp Duty. I do not react with a hostile reflex to either the City or the Bank of England. I do not dissent from what my hon. Friend the Member for Cardiff, South-East said about the Bank of England's policy in the past. There is no evidence to show that the Bank of England is now behind the Treasury in its economic thinking. If anything, it is rather in advance of it under its latest governor and it now seems to be a modern City institution. The way in which the Government have handled their disastrous stop-go policies may be better known to my hon. Friend the Member for Cardiff, South-East and hon.

Members opposite than to me. I do not know what advice they get, but the lamentable economic policies of the Government cannot be supported in any part of the House today.
Some of my hon. Friends are in error in supposing that the Stamp Duty is a sort of useful compromise between having an effective capital gains tax and not having one. I do not believe Stamp Duty to be a satisfactory substitute for an efficient and effective Capital Gains Tax. If Parliament introduced such a gain tax, and not a demagogic one, a more satisfactory situation would be created, for I do not believe that it is to the advantage of any community to make the transfer of assets between one citizen and another a very costly process.
A free market in assets is to the advantage of the community and the amelioration in the Stamp Duty is to be welcomed. It makes these assets more easily exchangeable and helps those who own and want to own such securities. However, this is not one of the great issues of the Bill. To my mind, the great issue is the measures that have been taken for the distressed areas. I do not intend to go into laborious detail on this subject, but I wish to register my firm protest at the ill-thought-out plans for dealing with the ills of the distressed areas. The Government's plan represents a tax concession which goes to make them areas of tax holiday. Such actions are no substitute for the creation of a buoyant economy which might absorb these marginal areas of high unemployment.
It is utterly wrong in principle that we should try to solve the problem of the distressed areas by creating industries in areas where they enjoy fiscal privileges not enjoyed by the rest of the country. I do not think that it will achieve the purpose of the Government or the purpose that we have on this side of the House in wishing to stimulate and help industry in those areas. The truth of the matter is plain. If we have areas where people will not go because it is not particularly profitable to go there, the wrong approach is to stimulate the economy of those areas by relieving them of Income Tax on profits which they will not be able to make. If they could have made profits reasonably well in those areas, people would have gone there. The


Economic Secretary, to whose courtesy, perseverance and general help to the House I must also pay tribute, ventured to say that, even if a firm could not earn profits in the development districts, a firm earning profits elsewhere could start in the development districts, knowing that it could get tax relief on its losses in the development districts.
It is an extraordinary inducement to say to a man, "If you go into a development district, you will not make any profits out of it, but you will pay less on the profits that you are making in other areas". That is hardly a logical argument. It does nothing to tackle the real economic problems, individually and locally, on the one hand, and the general economic probem, on the other. The general economic problem is tackled by the general buoyancy of the national economy. Individual and local problems are not tackled in this manner, because the greater part of the tax concession, since it is shown by way of tax on profits, inevitably and logically must go to those already making profits in those areas.
The greater part of the £46 million, or whatever it is going to cost that we are voting, will not go to the "new chaps" who come into the areas. When we come to review this next year, it will be painfully obvious that of the £46 million no more than a fraction can possibly have gone to new entrants in these areas.
A general tax concession, geographically limited, must inevitably go to those who are already making the bulk of the profits in those areas. We are making a needless and irrelevant tax concession to profitable businesses already established in those areas.
For reasons that have been given before, this may have an adverse effect on employment, because we are really encouraging firms to be more capital intensive in already profitable industries in those areas. They will economise labour by buying expensive machinery, at an artificially supported and unrealistic price financed by the Government, and, far from helping those areas, I think that on balance we shall be doing an injury to them. It is a matter of great regret that this ill-thought-out novelty has been introduced which is inevitably bound

to fail in achieving the object that we all have in mind.
I therefore register my protest at these three anomalies.
I want to say a final word about the point raised by the hon. Member for Walsall, South about the difficulty which hon. Members have in following the Bill. I think that it is high time that the Government, instead of indulging in this annual orgy of professional incomprehensibility, took some pains in the case of the Finance Bill to inform hon. Members what it is that they are debating. I must confess that some of it is Greek to me, and I am not altogether inexperienced in disentangling some of this legislation. What it must be for some hon. Members without experience to battle with this, I do not know. It is high time that the Government brought in a Finance Bill with a detailed, authoritative, explanatory memorandum so that hon. Members on both sides would know what was happening. I do not dare to say too much about this, but I think that one of the benefits would be that the Ministers would know what it was that they were advocating. It was painfully obvious on more than one occasion that they did not. I am not referring to anyone now sitting on the Treasury Bench.
I shall not say anything more about the general economic policy, which has been more than adequately dealt with by my hon. Friends on the Front Bench, with those remarks I sometimes wholeheartedly agreed. On the question of fiscal policy, I find the Bill a lamentable one in three respects: the abolition of Schedule A; the indefensible attitude in respect of the more expensive motor cars, which can neither be defended on the grounds of austerity, on the one hand, nor logic, on the other; and, above all, I protest against the strangely unwarranted novelty of the creation of areas of fiscal privilege where people pay a lower rate of tax than they do in other areas.

11.46 a.m.

Mr. Maurice Macmillan: I can at least thank the hon. Member for Manchester, Cheetham (Mr. H. Lever) for not joining in the general condemnation of the Stamp Duty. I, too, should not like to let this occasion pass without thanking my right hon. Friend the Chancellor of


the Exchequer for making this concession at last. I am quite unrepentant about this, despite the spirited attack made by the hon. Member for Cardiff, South-East (Mr. Callaghan) in his imitation, if I may call it that, of William Jennings Brown. I am not convinced that this concession is in either content or results a sop to the City, and I am grateful to my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) for the defence which he made just now.
My hon. Friend knows that I do not by any means agree in every respect with his ideas of the relative importance of various sections of our economy. In the contributions that I have made to this and other Finance Bills, including an Amendment which I was not fortunate enough to have selected, I have always made an attempt to suggest alterations in our tax system which would improve the position of the earner and the owner vis-à-visthe trader and the dealer. I am on record as being not altogether unsympathetic to some variations of the wealth tax advocated by the hon. Member for Cardiff, South-East.
I would congratulate the Chancellor on the steps he has taken towards a tax reform, although I should be out of order if I regretted that more had not been done in this way. I am grateful to the hon. Member for Cardiff, South-East for encouraging me to express more of my views and to take up more time in Committee in putting my personal ideas on economic problems, and I assure him that I shall in future take full advantage of his advice. Perhaps I should express it as a formal warning to the Treasury Bench. I think that his assessment of the effect on the City of our economic policy and relationship between the demands of the City and the demands of industry was extremely superficial and that it masked the general conflict in our economy between our position as bankers of the sterling area and a trading and exporting country. What he really means is that the burden of financing world trade is becoming increasingly harsh on dollars as well as on sterling. I think that the Leader of the Opposition, in an even more spirited imitation of William Jennings Brown, in New York not long ago made a more accurate and less superficial assessment of the situation than the

hon. Member gave very early in the morning the other day and repeated to some extent today.

Mr. Callaghan: If I had gone into the details then, or even this morning, I should have been very much out of order. I shall be delighted to send the hon. Member other comments I have made on this subject at other times.

Mr. Macmillan: I appreciate the hon. Gentleman not wanting to go into more details, but by not doing so he gave a misleading impression to the House of the real criminals in the case.
The Chancellor's greatest contribution in the Budget and the Finance Bill is the admission, as far as I know for the first time, by the Treasury that our expansion should be geared not to the limitations of our current liquid resources but, as in any other ordinary business concern, to our capacity to borrow on our assets. Perhaps he, too, has been reading the speeches of William Jennings Brown.

11.50 a.m.

Mr. Eric Lubbock: The hon. Member for Manchester, Cheetham (Mr. H. Lever) said that it would be very helpful if we had some indication of the meaning of these complicated Clauses which we have been discussing. We have not been very much in the picture when it comes to their meaning. This is particularly true of Case VIII. The hon. Member for Sowerby (Mr. Houghton) said yesterday morning that a booklet should be published under the title, "Case VIII for Tiny Tots". It would be a good thing if such a booklet had been issued before we came to the Finance Bill.
The hon. Member for Hendon, South (Sir H. Lucas-Tooth) raised a question yesterday morning which does not seem to have occurred to anyone until a late stage. It is the effect of Case VIII on local authorities which have a surplus on their housing accounts from time to time. The hon. Member explained that
Hitherto, local authorities have been charged Income Tax in respect of excess rental income for their council estates under Case VI of Schedule D. They have also been charged under the same case of Schedule D in respect of other activities, such as the provision of amenities—tennis courts, football and cricket pitches, bathing pools, bowl-


ing greens and things of that kind."—[Official Report, 26th June, 1963; Vol. 679, c. 1602.]
Up to the present Finance Bill they have been able to offset losses made on games fees against profits on which they were assessed for excess rents.
In reply, the Solicitor-General agreed that the local authorities would lose this concession, which has been worth as much as £40,000 a year to the Borough of Hendon and which has also been extremely important for Orpington Urban District Council. I believe that £150,000 has been saved over the years in Orpington as a result of this concession.
If the Solicitor-General had looked carefully at Clause 15, I think that he would have agreed that the point made by the hon. Member for Hendon, South was valid, because that Clause defines the kind of income which will be assessable under Case VIII as:
other receipts arising to a person from, or by virtue of his ownership of an estate or interest in or right over such land or any incorporeal hereditament or incorporeal heritable subject in the United Kingdom…
Then paragraph 13 of Schedule 4, which refers to deductions from other payments, says that
… where the sum to which a person becomes entitled in the year of assessment is a sum other than the rent payable under a lease there shall be deducted from that sum such amounts (if any) as are expressed to be deductible under the following sub-paragraph…
and it goes on to say what type of expenditure can be deducted under Case VIII.
I contend that the lettings of public parks for games purposes fall under this heading. Therefore, the loss on providing these facilities should be allowed to be offset against the excess rentals. It all turns on the question whether fees charged for games facilities come under the heading of payments for the use of land. There is a strong case for contending that they do. If this happens, the loss on games fees can be included in the global Case VIII calculations. Local authorities would then obtain some relief, as they have done hitherto.
It would seem logical that games fees ought to fall under this heading. They are the type of transaction envisaged

when Case VIII was originally thought of, and I am sure that it was no one's intention, when doing away with Schedule A, to put a burden on well-managed authorities, as this will do. The facilities offered by local authorities for games are facilities which they are able to offer by reason of their ownership of the land. Therefore, I hope that on reconsideration it will be agreed that both excess rents and games lettings will fall under the new Case VIII and that local authorities will obtain some benefit, as they have done previously.
I should like to ask the Economic Secretary to deal with this point in winding up and also to say whether he does not consider that income from cemeteries should also fall under Case VIII, being income, as it is, derived from the use of land. This is an extremely important matter for the local authorities concerned. I hope that further consideration will be given to the reply which was given to the hon. Member for Hendon, South yesterday morning.

11.56 a.m.

Mr. F. M. Bennett: The most interesting feature of speeches made so far today from the Opposition benches is the apparent unhappiness about the removal of Schedule A. This unhappiness was not found in the earlier stages of the debate. It is true that I have been absent abroad on business during some part of the proceedings on the Finance Bill but I do not remember an occasion when the Opposition went into the Lobby against Schedule A. We on this side of the House will be intrigued to think that it is becoming the official policy of the Labour Party to restore Schedule A. I hope that this will become increasingly clear as the months go by.
Like my hon. Friends, I want to return to the charge about the halving of the Stamp Duty, with particular reference to the debate in the early hours of yesterday morning. Two of my hon. Friends have already made their position clear. I should like to do the same and perhaps give a more concise explanation of why I am wholeheartedly in favour of this reform than it was possible to give early yesterday.
One or two excerpts from the speech of the hon. Member for Cardiff, South-East (Mr. Callaghan) have already been


made. I should like to make one more. The hon. Member said:
This complaint stems from a small group opposite. … "—[Official Report, 26th June, 1963; Vol. 679, c. 1573.]

Mr. Callaghan: I have no objection to the hon. Member giving more publicity to my remarks, but is it in order, Mr. Speaker, to quote from a speech in the same Session of another hon. Member unless he is a Minister?

Mr. Bennett: Frightened.

Mr. Speaker: I thought that the hon. Member for Torquay (Mr. F. M. Bennett) was picking up some point. There must be some licence in order to reveal the point which is involved. I am advised that is right. The hon. Member cannot quote. He should in some way dodge round quotation.

Mr. Callaghan: I hope that the hon. Member for Torquay will paraphrase in any way he can and repeat it as often as he cares to.

Mr. Bennett: I was aware of the rule and I was encouraged to quote only because, possibly due to inadvertence, you, Mr. Speaker, tolerated earlier quotations from the same speech today and I noticed that the hon. Member for Cardiff, South-East did not then make the objection which he now makes.

Mr. Callaghan: A line must be drawn somewhere.

Mr. Bennett: The line is to be drawn no doubt when the quotation is particularly pertinent.
I would remind the House that the hon. Member alleged perfectly clearly that this reform arose from a small group in my party who had a clear interest in getting the Stamp Duty abolished, an interest which was shared by the Stock Exchange. Those were the actual terms of the criticism. It seemed to mean that a small group of us had a clear interest in this matter. Two of my hon. Friends have made their position clear and I want to do so, and I have been asked by one of my hon. Friends, who is not here because of constituency duties, my hon. Friend the Member for Nottingham, South (Mr. W. Clark), to make his position clear, too.
It will be within the recollection of the House that I welcomed—almost insisted on—being included in this lobby, not from any masochistic feelings about the criticism of the hon. Gentleman, but because I take pride in the fact that over a number of years several of us in public and at other times made it clear that we have regarded a high rate of Stamp Duty as an obstacle to the maximum use of the resources of this country in investment. It is for that reason alone, and if—as it is—to belong to that lobby is to wish to see the interests of the country furthered I am sure that we are all pleased to be criticised by the hon. Gentleman for being in that lobby.
As for the halving of the Stamp Duty, it seems to me that there are three main reasons for it which must have been in the Chancellor's mind. The first relates to domestic investment, to encourage a wider and wider circle of people to invest in stocks and shares and industry in this country. I do not pretend to any expert knowledge of this. My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) knows a great deal more about this, and he has done a great deal of work in this connection during the last few years, and I do not think there is any need for me to add anything to what he has said about it.
The second question, which arose in those early hours, is that of investment in British shares by foreigners. I emphasised during my remarks then that I, like many of us, am in favour of an increase in investment from overseas in this country. Then I was criticised for this by the right hon. Gentleman the Member for Battersea, North (Mr. Jay), who is not here today, on the basis that this was a dangerous process because, far from meaning an increase in our earnings, it might, as dividends from shares are paid overseas out of sterling actually mean a net loss in our earnings. This, of course, is a misleading picture, because in the first place this is capital investment in this country, which is a gain to us in the sense that it adds not only to our direct reserves, and to the confidence of the outside world in this country's expansion, but incidentally enables our own industries to expand with greater reserves of capital than they could get merely from internal sources. At any rate, a lot of these investments are made from blocked


sterling, and it is just as well for that blocked sterling to be invested in industry in this country rather than held idle and to contribute to those variations in the value of sterling which caused financial crises in the past when the £ has been under strain.

Mr. H. Lever: Having made a defence of dividends in this country on the grounds of encouraging investment here from overseas—with which I readily agree—would the hon. Gentleman tell the House why he gave support to the Government in not giving fiscal advantage by the opposite process, namely, our investing our capital overseas, where it has not a fiscal advantage, thereby helping to promote financial crises by which we have been bedevilled over recent years?

Mr. Bennett: Certainly. I do not know how far it would be in order to pursue that matter, which is an economic question rather than one of the detail of this Bill, but the reason, surely, for that is, that we are a trading nation, and that applies to our finances as well as to everything else, and we really cannot expect everyone else to invest in our country unless we do something to invest in other countries, if we wish to export more, particularly manufactures, from this country. That is as far as one can go into that field, I think, without being out of order, much as I am tempted to go further.
Under this second heading of investment in England the strangest of all analogies was made by the hon. Member for Cardiff, South-East with Switzerland. I think a correction of what was said must be placed firmly on the record.
The Swiss do not object to investment in Switzerland, nor do they penalise investors. I think the hon. Gentleman with the aspirations he has ought to get straight a fundamental financial matter like this. I will repeat, therefore, what I was attempting to say in the early hours. The only thing the Swiss penalise is the opposite process, leaving one's money idle in a bank, in current account or some other form where it is not invested in Switzerland in industries. If one is prepared to invest in Switzerland one is encouraged in every way, but if one leaves one's money in a bank

idle one is penalised—although it is not fair to use the word "penalised", because the truth is that the Swiss are so prosperous that they do not require idle resources of currencies lying idle in banks. The argument is therefore precisely the opposite of what the hon. Gentleman said.
Lastly I come to a point not touched on yesterday morning. I think it is a very important feature not just for investment in England, not just to domestic investment. I will say again what I sought to say yesterday morning.
In recent years, particularly because of the expertise of the City of London, foreigners, for example Americans, who have become increasingly interested in investment overseas, apart from investment in England—I am now referring specifically to investment in Common Market countries—have had a clear choice before them, either to go to a Continental financial centre to do it or to come to London. Because of our particular expertise we have been able to get a certain amount of this business from Americans who wished to invest on the Continent.
There was no possible question of a strain on sterling present or prospective. It is a question of dollars going into other currencies, apart from sterling, anyway. The choice was whether to do it through London or through Continental centres, and the only question which arose here was whether all the benefits which come from these indirect invisible earnings should come to Britain or should go to a Continental centre. There was no question of a choice between British investment and Continental investment. It was a matter of Americans specifically wishing to take up positions on the Continent and whether they would use London or some rival centre to do it.
In these circumstances there has been a certain amount of such method of investment not only, incidentally, by Americans in Europe but, very often, by Europeans who want to invest in America, or elsewhere, and who want to use the City of London so to do. In these cases everything which accrued to us was a net benefit with no possible risks of over-investment by foreigners in the sterling area. Foreigners, when making investment in a third country, were faced


with this choice of using England as their medium or not.
Up to now there has been a not inconsiderable disadvantage in their doing it here because of the extra costs involved. One of the Treasury Ministers—I think it was the Economic Secretary—during those early hours, gave the sort of figures involved when an American, say, wanting to invest in France, was choosing whether to do so through Milan or through London. In London it would have cost him 2·8 per cent., in Milan 0·4 per cent.
This is the issue which has not been touched on so far. I have a little knowledge of this subject. I hope that from now on, with the change in the Stamp Duty, there will be a considerable increase in our earnings through facilitating investment through our financial centre through which a large amount, and an increasing amount, of the world's investment can be done with benefits accruing to us and no possible disadvantages whatever.
For this reason, and if this were the only reason, I am particularly happy at what the Chancellor has done by removing—I mean, cutting—the Stamp Duty. The fact that I keep saying "removing" shows how keenly I wish that he had been able to remove it. We must hope for that on a future occasion.
With regard to being a centre for international investments, the third category I mentioned, I suggest that we should not underrate their importance to our industry and other aspects of British financial and industrial activity. Once one gets a foreign businessman used to doing his business deals through London in one field, he usually does them in another field. One finds insurance and shipping matters and actual orders for goods often flowing once one gets an individual used to doing part of his business through London, and that benefits not only the City but the whole of the British economy.
Therefore, I warmly welcome the Chancellor upon a first step—I think there will have to be a second step soon—towards making it even easier for Britain to become once more the leading financial centre for the world.

12.11 p.m.

Mr. Tam Dalyell: I wish to hark back to a point raised by my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and myself at 2 o'clock yesterday morning and referred to by my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) and the hon. Member for Orpington (Mr. Lubbock). It concerns the presentation of the work with which we are expected to familiarise ourselves.
It is very easy when arguing for lucid presentation to pick out certain perhaps rather extraordinarily long Clauses, but I wish to take an average Clause. I would refer, for example, to paragraph 7 of the Chancellor's new Schedule, "Allowance of Trading Deductions where Premium Etc. Paid," which we discussed the other night. If I am right—and it is a big "if"—there are in it 11 adverbial clauses, 4 noun clauses and 3 adjectival clauses. This seems to me to be a reasonably fair average of the sort of thing that we have to deal with. I am not criticising the Parliamentary draftsmen, because they are among the ablest people in our country. I do not doubt this; there is no question about it. But, at the same time, is it not important in itself that this kind of legislation should be easy to understand by all hon. Members and those who have to deal with it outside?
Taking the Bill itself, I would refer to Clause 37 (9), which consists of 17 lines. Perhaps I may give a concrete example of how it could be changed. It begins:
Where a person (in this subsection referred to as 'the transferee') acquires a mineral asset from another person (in this subsection referred to as 'the transferor')….
Would it not be more lucid to put at the top of the subsection a series of definitions and then to print the heart of the matter?
The objection to this line of arguing is that there is a constant battle between the Inland Revenue and the lawyers of financial houses, who are perhaps chiefly concerned. At the same time, unless legislation is fairly well understood by firms, which are concerned with many of these Clauses, how can one expect them to take advantage of the measures which the Chancellor may introduce?
A further point of some consequence is that many experienced members of


the Press who work here will themselves say that they are just lost when it comes to Finance Bill legislation. This in itself is unhealthy.
Therefore, in connection with Questions to be addressed on Thursday next week to the Prime Minister by my hon. Friend the Member for Rotherham (Mr. O'Malley) and myself, I would ask the Minister to have a word with those who are responsible for deciding action on this sort of subject so that we may have a sympathetic answer to our Questions.

Mr. William Yates: Would not the hon. Gentleman go one stage further? Is it not time that some of this expertise business of the Committee stage, and of other stages of the Bill if necessary, was taken upstairs? Would he not also ask the Government to examine that?

Mr. Speaker: It is not in order to deal with that subject on the Third Reading of the Finance Bill.

12.15 p.m.

Mr. Graham Page: The hon. Member for West Lothian (Mr. Dalyell) has criticised the complication of some of the Clauses in the Finance Bill. That is very easy criticism. There are always complicated Clauses in any Finance Bill. Other hon. Members have criticised the fact that we received some very long Clauses and Schedules at a very late stage in the progress of the Bill. But this is easy criticism, too.
I should like to put the other view. When the Government come to the House with a Bill already written and refuse to make any alterations to it during its stages and are obstinate when hon. Members put forward recommendations and propose Amendments to make the Bill better, we complain, and we complain bitterly. I do not think we ought to complain when, as occurred in this case, the Government listen to and act upon the speeches made on Second Reading and particularly during the Committee stage. My right hon. and hon. Friends on the Treasury Bench did everything they could to meet the good points made from both sides of the Committee, but it involved rather long new Schedules and the rewriting of a large part of the Bill.
I should like to pay my tribute particularly to my hon. Friends the Financial

Secretary and the Economic Secretary to the Treasury and my hon. and learned Friend the Solicitor-General for the way they dealt with the Amendments and not only got our points right but explained our own points to us very clearly.
The hon. Member for Cardiff, South-East (Mr. Callaghan) said that this was not a very exciting Bill, but I think one can call it a major Bill, both politically and fiscally. The hon. Member for Manchester, Cheetham (Mr. H. Lever) put his finger on the three points in respect of which it is a major Bill. Incidentally, it is always delightful to hear the hon. Member for Cheetham, even when he is charming the House for only a few minutes instead of a few hours.
I must say that the hon. Member for Cheetham would not have got away with a speech like that on any other day but a Friday. We on this side of the House are very polite on Friday mornings, and so are his hon. Friends, but I think that had he put forward such extraordinary statements from that side of the House on any other day he would have had a considerable number of stabs in the back from his hon. Friends. I was delighted to hear some of his remarks, and I shall remember to quote them—his criticism of the assistance to development districts, his strictures about the abolition of Schedule A and his praise for the reduction of Stamp Duty on transfers. This came strangely from the mouth of the hon. Gentleman.
Those were, I think, the three major points of the Bill. With regard to Schedule A the hon. Member for Cheetham—I refer again to him because his speech interested me so—said that it was a sound principle of tax law. What on earth is sound or even a matter of principle in taxing a man for using his own property and taxing him on an entirely notional figure with the idea that he might have hired it out for someone else to use? If one has to be logical about that and say that it is a matter of principle, one surely has to go the whole hog and make a true valuation of his property. I would like any hon. Member to think what his constituents might say if, instead of abolishing Schedule A, my right hon. Friend had brought the annual value up to the true value and had said that owner-occupiers would now be taxed on that.

Mr. H. Lever: He should have done.

Mr. Graham Page: The hon. Gentleman will find himself in a very small minority if lie holds that view. After all, this will affect a large body of people whose number over the last few years has grown in proportion to the number of other householders, with the result that a very substantial proportion of householders will welcome the abolition of Schedule A.
I want to call the attention of my hon. Friend the Financial Secretary to what has been happening already as a result of the Bill. Throughout its stages, we have discussed mainly the effect of the abolition of Schedule A on the owners of rented property, and, indeed, that is where the transition is most complicated—from Schedule A to Case VIII.
Incidentally, perhaps I may interpolate here the comment that each year we seem to get a new Case. Next year, I suppose that we shall go one over the VIII, and I am rather nervous as to what Case IX may be. However, we have Case VIII this year and have discussed the transitional stage from Schedule A to that Case, mainly, for the owners of rented property.
We did not spend much time on what was happening with the owner-occupier. Owner-occupiers who paid their Schedule A tax on 1st January last have now been sending in their usual maintenance claims—for the relief on an average of their expenditure over the last five years, including, of course, the last year, 1962–63, in which they may have spent quite a bit of money before they knew that the Chancellor would wholly abolish Schedule A.
In reply, they have received one of the nastiest little notes from the Treasury that I can imagine. It is not even a nice form. It is only a small note. It says that, because of the provisions of the Bill, the owner-occupier will not now be entitled to make any claims for maintenance relief.
Those of us who have studied the Bill knew that, but to those who have not it does seem rather tough on the owner-occupier, who has paid his tax in January, and has spent money since the April before last on his house. Of course, we know that he used to get it back,

in the year of assessment, on the average for the five previous years. But the Department might have explained that fact, instead of sending out this nasty little note. I do not know whether other hon. Members have had it sent to them by their constituents, as I have, but I know that some of my constituents are "hopping mad" about it.
They say that it cannot be right for the Government to do this. They have paid their taxes, they say, and want relief in respect of expenditure, but now the Government tell them that they cannot have it. If the note had explained carefully the basis of Schedule A and explained it politely, I do not think that we should have had this resentment. I hope that my hon. Friend the Financial Secretary will look into this and see that the note which will go out in future, telling people that they cannot claim relief, will explain things a little more carefully.
Chapter I of the Bill deals with changes in rates of tax and personal reliefs. This will involve a new P.A.Y.E. Tax Tables which will, I understand, come into operation on 5th July. This means reprinting the P.A.Y.E. Tax Tables, and I understand that they are to be in the old form. My hon. Friend knows that I have put to him in the past two years a very simplified form of P.A.Y.E. Tax Tables, and surely this was the opportunity in which to simplify the present tables, which constitute one of the most difficult forms to work out quickly. One has to turn pages and turn back to columns, and so on. The Bill, having made it necessary to reprint the Tables, provided an excellent opportunity for a simplified form of Tables to be used. This would save millions of pages of printing and thousands of hours of time in working out the figures.
I mentioned that there were three important items in the Bill—all major steps both politically and fiscally. They are Schedule A, capital allowances in development districts and the Stamp Duty relief. My right hon. Friend said today that the effects of the Budget would not be seen for some time, but I assure him that the capital allowances and the discrimination in favour of the development districts have already begun to take effect. Clause 38 has had an immediate result, certainly in my own area


on Merseyside, where there have been inquiries from manufacturers about the prospects of development there. It is a subject of the utmost importance.
In dealing with Part IV Stamp Duties, which reduced duties on conveyances and transfer of shares, there emerged from our discussions on the Bill a plea from time to time for the complete abolition of Stamp Duty on these various transactions. It seems to me that we are progressing towards the stage where Stamp Duty on documents of this sort will be an exception. As it is, having abolished the duty on conveyances, up to a fairly high figure, in the Bill, and having reduced it on transfers of shares, it is becoming more and more exceptional on documents.
The Bill confirms Schedule I of the Stamp Act, 1891, except for certain alterations, which gives me the opportunity of saying that the confirmation of that Schedule confirms the collection of the petty imposition of the 2d. receipt stamp. This produces only £1½ million now compared with the £5 million it yielded at one time. But it costs industry and commerce £9½ million a year in labour and stationery to collect that £1½ million for the Treasury. Having got that point in without you interrupting me, Mr. Speaker, I had better sit down again, repeating my tribute to my hon. Friends the Financial and Economic Secretaries and to my hon. and learned Friend the Solicitor-General for the assistance they gave throughout the Bill.

12.30 p.m.

Mr. Brian O'Malley: I want to support what has been said by my hon. Friend the Member for West Lothian (Mr. Dalyell). When I came here a few months ago as a new Member interested in economic and financial affairs I decided—for this year, at any rate—to make an academic study of the proceedings arising from the Budget and the various stages of the Finance Bill. Although I had had some limited previous experience of reading Bills, including Finance Bills, I found very great difficulty in understanding some of the Clauses and Schedules of this Measure.
Like my hon. Friend, I appreciate the skill of the draftsmen, and the problems involved for the Inland Revenue, and

accountants and solicitors of finance companies and other organisations. Therefore, while not going as far as my hon. Friend in asking for the form of Finance Bills to be amended, I would ask the Chancellor—particularly in view of his remarks the other day—whether, with future Finance Bills, detailed explanatory memoranda might be published as White Papers to assist back benchers like myself, with my limited experience, and others with more experience, the better to understand, before coming into the Chamber, just what we are to discuss.
My hon. Friend and I have Questions to the Prime Minister next Thursday to this effect, but I take this opportunity of asking the Chancellor to consider helping us in this way in future years.

12.32 p.m.

Mr. William Yates: The hon. Members for Rotherham (Mr. O'Malley) and for West Lothian (Mr. Dalyell) have a point. I join in paying tribute to the Chancellor, the Financial Secretary and the Economic Secretary, first for producing this Bill, and then for piloting it through all the various stages—sometimes to a very latehour—but, having been faced with these Finance Bills now for quite a number of years, I wonder whether it is necessary to have them at all, together with all the hullabaloo of the Budget, all the accompanying paraphernalia and the dislocation of other work.
I could, if I wished, divide the House against this Bill. I shall not do that, but I will lay down certain conditions about the Bill that I want my right hon. Friend to note. First, I do not approve of this protracted method of conducting our Finance Bill work, and I ask him to consult once again those to whom he is responsible for preparing—

Mr. Speaker: Order. One cannot possibly bring within the rules of order relating to the Third Reading of this Bill the entirety of our finance procedure, annuality, and so on.

Mr. Yates: I realised that I was in danger of getting into grave difficulty now to draw attention to the progress of the Bill through its various stages to this Third Reading. However, the Chancellor must already have taken the point


made by the two hon. Members to whom I have referred, and all I ask is that, in future, we might have explanatory documents so that we can understand these Measures, and carry out our duties to our constituents.

12.35 p.m.

Mr. Douglas Houghton: Though I warmly welcome the plea of the hon. Member for The Wrekin (Mr. W. Yates) for enlightenment, explanation and elucidation of this complicated Bill, he has, if I may say so, come into the debate rather late in the day. This plea for greater assistance in dealing with this Finance Bill and similar Measures has been reiterated several times in our debates, and it is noteworthy that it has been reaffirmed by at least three hon. Members today. Indeed, my hon. Friends the Members for West Lothian (Mr. Dalyell) and Rotherham (Mr. O'Malley), both of whom we have welcomed to our debates on this Bill, confined their brief interventions to this very point.
I hope that the Chancellor will have taken note of their remarks. Although it is not in the fashion just now to make rash promises from this side—it is really unnecessary, when a Government are on their way out, to assist matters by making any rash promises about what we will do when we take their place—at least I will say that a Labour Government will certainly assist the House more than it has been assisted on a complicated Bill of this kind. In the middle of the night this week I made another speech on this very question. I said that this was not a local glee club, but the House of Commons, and that the House of Commons should be allowed to do its work intelligently and be given every assistance to do so. I leave the matter there.
The Chancellor spoke of this being a large Bill—a thick document—and I want to speak of its contents from the point of view of administration. Before doing so, however, I want to thank the Chancellor for his own courtesy and help in dealing with this Bill and, of course, most warmly to thank his colleagues on the Treasury Bench, who have worked so hard and have been unfailingly courteous and diligent in their duties.
We should also thank all those who have assisted them—the Inland Revenue, the Customs and Excise, the Parliamen-

tary draftsmen, and, indeed, the printers, who have produced the Bill for us this morning in its final form when we were still carving it up only a little more than 24 hours ago. That is a feat of production that private enterprise might one of these days emulate.
The Chancellor has been a most agreeable and modest opponent—so very different from the gentleman named Mr. Cassius Clay, of whom we caught a brief glimpse a few days ago.
When my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said that this has been a dull Bill, I do not think that he meant that it has been lacking in interest or substance. It has not been exciting in a Parliamentary sense, perhaps—we have not had bitter clashes between the two sides on contentious proposals—but that is not surprising. When the Chancellor of the Exchequer of a Conservative Government at last goes our way, who are we to quarrel with him, and make life more difficult for him in our debates on the Bill? I shall say more about that in a moment or two.
There is an enormous amount of work in this Bill, and I think that some processes in connection with tax administration now need serious examination. The earlier part of this Bill, Chapter 1, alters personal allowances on a wide scale, and an almost complete recoding for P.A.Y.E. is necessary as a result of the proposals in this Chapter. Twenty million people who are assessed to tax under P.A.Y.E.—I think that that is roughly the right figure—received coding notices before Christmas telling them what their code number would be for1963–64. The tax deductions which began for this current tax year on 6th April were based on the codings issued to them at the end of last year. The Bill provides for those codings to be changed from the first pay week in July to give effect to the changes in the Bill. This means that since the Chancellor made his announcement of these changes on 9th April, until this week, the Inland Revenue has had to carry out an entire recoding for P.A.Y.E. In other words, it has had to do last year's job all over again.
There is nothing more disheartening than having to do the same job twice. That is what nearly broke our hearts


in the debates the other night, when we ploughed through Schedule IV and poured forth our energy, drained our intellects and our application, and then found that we were presented with a revised version and had to start all over again. Some of us rebelled, and I wonder that the Inland Revenue has not rebelled at what it has to do to get the recoding out. Two million hours of extra work have been involved in this, with the employment of extra staff, and so on, and I think that the Chancellor should consider whether, when changes of this kind are introduced, there could be some smoother transition even if it meant using the coding issued at the end of the previous calendar year temporarily to carry on until the changes under the Bill became effective in the first pay week in July. I shall not stay further on that, but it is a big question of administration which I think the Chancellor should consider.
Case VIII of Schedule A is another source of additional work, and I am not at all satisfied that the Inland Revenue is at present equipped to cope with it. No one really knows what is going to come out of Case VIII, or how many problems will arise. Certainly the comparative simplicity of the old Schedule A will be replaced by the examination of individual cases to an extent never necessary before.
The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) referred to the physical side of the Finance bill—the wear and tear on hon. Members on both sides of the House. We are not complaining of the time which has been given to the consideration of the Bill. The Chancellor has been very accommodating about this, and has provided us with reasonable time in the circumstances. There may be considerable weariness of the flesh. It is tiring if one sits for too long. It is tiring if one stands for too long, and it is certainly tiring to other hon. Members if one speaks for too long. I must be careful not to run into that danger myself, but my enthusiasm for Finance Bills does not wilt on the Third Reading. As I have made clear before, the last opportunity that one has of discussing a Finance Bill on Third Reading is far too good to be missed.
My hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) is a most entertaining nonconformist. I envy the freedom that he has had to speak his mind on Schedule A.

Mr. Graham Page: On a Friday morning.

Mr. Houghton: On any morning. All I can say is that if I had been as free as my hon. Friend has been I should have been here very much earlier, and would have spoken for very much longer and more emphatically on this topic than my hon. Friend has done.

Mr. H. Lever: My hon. Friend's recollection is faulty. I spoke for longer than I ought to have done. I spoke with even greater vigour on this subject and expressed my protests and supported the notional speeches that my hon. Friend would have made.

Mr. Houghton: I had not overlooked that, but on a matter of this kind, upon which one might feel deeply, it is not enough to make one protest. One has to be persistent. One has to drag it in at every conceivable opportunity. After all, the hon. Member for Crosby (Mr. Graham Page) has just thrust into the debate his own passion for the abolition of the Stamp Duty on receipts. Anyway, this is a very late hour at which to indulge in any lamentations, if any remain, about this change.
My hon. Friend the Member for Cardiff, South-East very properly mentioned the likelihood that with the abolition of the tax on the annual value of an owner-occupied house the occupants of tenanted properties who are paying rent will reappraise their position in relation to our taxation system. Indeed, the right hon and learned Member for Wirral (Mr. Selwyn Lloyd) mentioned two years ago, and Lord Amory, as he now is, even before that referred to the logical consequence of the abolition of Schedule A on the owner-occupier and the claim that would be made for some corresponding relief on the tenant. However, events will unfold on this matter.
The hon. Member for Halifax (Mr. Maurice Macmillan) who, if he will forgive a personal reference, seems to be wearing "Liberal" socks this morning, is to speak in the radio programme "The Week in Westminster" tomorrow and I


hope that this will not prevent appropriate reference being made to the inspiration which he brought to our debates the other night and again this morning on the question of the removal of Stamp Duty.
The hon. Member for Torquay (Mr. F. M. Bennett) and the hon. Member for Walsall, South seemed to be stunned by something said by my hon. Friend the Member for Cardiff, South-East during the long debate the other night. Both hon. Members seemed to be on the defensive, but the Bill contains, at least in large measure, the concession they wanted. What are they nattering about? Perhaps they feel that my hon. Friend said something about their activities and those of their friends which seems to have produced a sharp reaction, but the Chancellor of the Exchequer has in large degree met the insistent claim that has been made on him in this regard.
The hon. Member for Torquay made a Freudian slip when he spoke of the removal of this duty when, of course, it has been removed only as to a half. He said that it just showed how strongly he felt about getting rid of it altogether. My hon. Friend the Member for Cheetham said that the abolition of Schedule A on the owner-occupier was a very high price to pay for the arrival of the hon. Member for Orpington (Mr. Lubbock). I think that it would have been truer to say that this was the cost of the efforts being made by the Government to get rid of the hon. Member for Orpington. That is the cost of the abolition of Schedule A. I hope that the country will take note of the price—£50 million a year in tax relief—put on the head of the hon. Member for Orpington. Obviously he could not bear such a heavy load of responsibility because he has left the Chamber temporarily to recover from his own very pointed but, nevertheless, complicated contribution to our debate.
The hon. Member for Torquay made an impertinent observation, saying that our reserve about the abolition of Schedule A on the owner-occupier was an indication that the Labour Party would come out in favour of the restoration of the tax which the Chancellor of the Exchequer is removing in this Bill. The hon. Member has no justification for making any such suggestion, and I must refute it straight away.
I must not trespass on the time of the House for very much longer, but may I be allowed to say this. The hon. Member for Crosby said that this is a major Bill. It is a major Bill. I doubt whether it is sufficiently realised that this is the first Finance Bill for many years which provides for what is commonly called deficit financing of the Budget. That makes it a major Bill. I think that it is the first time since the war that a Finance Bill has been introduced the financial consequence of which is known to be, and indeed is designed to produce, a deficit above the line. We on this side believe that in present circumstances a Bill of this kind which does this is justified. As the Chancellor of the Exchequer said, the Bill opens up the possibilities of economic expansion and the encouragement given by tax adjustments and concessions which are to come partly out of revenue and partly out of borrowing.
During an earlier debate when I was moving a new Clause asking for further reduction of taxation, the hon. Member for Ilford, South (Mr. Cooper) asked "How is this money to be found?" That is a question which we have heard many times. I replied that it would obviously add to the borrowing requirement under the Bill. So then he asked, "Are we no longer to go on paying our way?" The truth is that the express design of the Bill is that we should not contain our expenditure this year wholly within current revenue. The Chancellor of the Exchequer made that clear this morning.
Borrowing in this context is not a profligate policy. It is a means of channelling some of the savings of the people in directions which the Chancellor of the Exchequer judges will promote his economic aims. This is, perhaps, not an occasion when money should fructify in the pockets of the people so much as it should fructify in the hands of the Chancellor of the Exchequer, who has what he conceives to be a proper use for it. The Bill is one means of bringing that about.
The financial consequences of the Bill are tax reliefs of £270 million, but, after allowance is made for a cut in taxation of £270 million, the amount of taxation which, on his estimates, the Chancellor of the Exchequer will get will be up by


£45 million more than in the last financial year. If expenditure were not rising so sharply at the same time, he could have estimated for a substantial surplus at the end of the year, notwithstanding that he is giving tax reliefs of this magnitude, but, as expenditure is to rise this year by £490 million, the Chancellor has to make provision for a deficit of £90 million above the line and provide for his below-the-line requirements as well as some of the expenditure on the Consolidated Fund and the supply services above the line by borrowing.
That is what is called deficit financing, and some people will regard this as rake's progress. They will ask, "Are not we living within our means?" The question is, what are our means? The country's means go far wider than the simple revenue return under this Bill. Many people believe that tax reductions are synonymous with a lower yield from taxation. They are not. That is not true. As I said in other circumstances, we could have had tax reductions together with a rise in revenue and an increase in expenditure. Had not the expenditure risen so sharply, deliberately and with a purpose, this time, that would have been the outcome of this Bill and this year's Budget. The Chancellor would have finished on the right side, notwithstanding the slash in taxation which the Bill envisages.
I am sure that the Chancellor of the Exchequer would have been far happier—so would we all—if what he is doing this year could have been financed from a more buoyant economy and a more buoyant revenue. He is having to provide for the borrowing requirement to meet his tax reliefs which have an economic purpose which he feels it imperative he must fulfil.
If one looks back over previous Finance Bills and Budgets, one sees how consistently it has been possible to make tax reliefs and at the same time to have the benefit of rising revenue out of which additional expenditure can be met and still have a surplus at the end of the year. I wish that this point were better understood. If it were, we should not have so many Tories saying at different times, "Where is the money coming from? How will you pay for it?" They were saying that in 1959. Only a few

weeks before, the Chancellor of the Exchequer had cut taxation by over £300 million. He was providing for a rise in expenditure and still budgeting for a surplus. That kind of paradoxical approach to our budgetary affairs is very difficult for people to grasp.
Incidentally, we are talking about reductions in taxation. For the record, may I be permitted to amend a reference to a speech which I made the other night in which I am reported to have said that the Chancellor had reduced taxation in 1952 by only £81 million. I hope that I have never referred to £81 million as "only", whether it be a reduction or an increase in taxation. It should be, of course, by £8½ million. This is in column 1350 of Hansard. I should not like it to go out that I cannot distinguish between £81 million and £8½ million. My reputation as a statistician is not as good as all that, that I can take a risk with it.
To conclude, I think it worth while just bringing to the notice of the Chancellor, while he is here, one aspect of the Bill which I am sure must be causing him considerable concern, and that is whether it is going to do the economic job which he has designed it to do, and, secondly, whether it is going to have in one field at any rate—the trade union field—the effect that he hopes it will have. We all read in the Guardian on Monday, 24th June, with considerable interest and concern, an article by Mr. John Cole, the labour correspondent, in which it is reported that the Chancellor, rarely I am sure, was impatient at a meeting of the National Economic Development Council and that he made an acid remark. This is out of character, and the Chancellor must have been feeling something if this happens to be true. The point is that it is reported that the Chancellor pointed to his Budget, which has been tacitly recognised in the trade unions as the kind likely to create a climate for restraint in wage claims, and said pointedly that it is time for someone else to act.
This Bill contains a great many things which the Trades Union Congress had urged on the Chancellor and which we on this side of the House had urged on him, and it would be a comfort if we could have some assurances that the Bill is going to achieve in the several


directions of importance the purpose which the Chancellor has in mind.
That is the end of what I want to say, and once more I wish, on behalf of my hon. Friends and myself, to thank the Chancellor and the Treasury Ministers for all their help during our long and at times difficult debates.

1.4 p.m.

The Financial Secretary to the Treasury (Mr. Anthony Barber): In reply to this vote of thanks on behalf of my hon. Friends and myself, may I begin by saying how very much we, in turn, are grateful to the hon. Gentleman the Member for Sowerby (Mr. Houghton) and to his colleagues? Indeed, I think at the outset, when I moved the Second Reading of the Bill, I expressed some gratitude, because, having worked with the hon. Gentleman and his hon. Friends in previous years, I knew that this year also we should receive the same courtesy and knowledge from a good many of them as we have in the past. I think I can say without discourtesy to another place that this is, for all practical purposes, the end of another Finance Bill and to me falls the lot of burying it, but, like another funeral orator, I hope that I may be permitted a word of praise.
The Bill embodies the Budget proposals of my right hon. Friend, and I must say that although I have not been in this House for as long as others, some 12 years or so, I cannot recall another Budget the basic principles of which evoked less criticism than this one. I think it is true to say that since 3rd April when the Budget was announced it has, in the view of most commentators, justified the various measures which my right hon. Friend advocated and which are contained in the Bill.

Mr. O'Malley: Surely the hon. Gentleman and his right hon. Friend the Chancellor will recognise that their confidence of an expansion arising from this Budget in at least one section of industry is not well founded. If one looks at the company returns and comments of the steel people and recognises that the heavy steel industry is still running at only about 76 per cent, of capacity, one sums up by saying that the view of the people in the steel industry is that there is very little prospect

of an upturn in their orders during the rest of this year.

Mr. Deputy-Speaker (Sir William Anstruther-Gray): Order. I am sorry to interrupt the hon. Member, but he will appreciate that he is not entitled to make a second speech. One is all that can be allowed.

Mr. O'Malley: I apologise, Mr. Deputy-Speaker. The point I was trying to make was that the confidence of the Chancellor is not being fulfilled and that we are not seeing any improvement in the heavy steel industry as a result of this Budget.

Mr. Barber: Of course, it is perfectly true to say, as my righthon. Friend has said on a number of occasions recently, that all the sections of the proposals which he announced on 3rd April have not yet been effective. The P.A.Y.E. reductions do not come into operation until the beginning of next month. As one of myhon. Friends pointed out, the provisions for accelerated depreciation for those engaged in capital development will have a more gradual effect. But I think one can say with some confidence that so far the proposals of my right hon. Friend are working out pretty satisfactorily. One has only to look at the unemployment figures to gain some satisfaction, and to see what is happening.
My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) said that the better the Bill, the less need to talk about it. That is an observation that may apply to some more of my hon. Friends, but, unfortunately, it does not seem to apply to my hon. Friend the Economic Secretary and myself.
The hon. Member for Cardiff, South-East (Mr. Callaghan) stated that this Budget curiously embodied a reversal of last year's policy and said that we were now back to where we were. Perhaps I might make two observations to him. If it is accepted, and, indeed, I know that it is by the hon. Gentleman and his hon. Friends, that the Budget should be used as an instrument of economic policy, then it must follow that what is appropriate for one year is not necessarily appropriate for another. Last year's Budget is not in the scope of this Bill, but I will not refer to it. However,


as far as this year's proposals are concerned, the fact is that, in the words of one of my hon. Friends a few minutes ago, this is a good Bill and appropriate to present circumstances.
The hon. Gentleman went on to make once again some most disparaging remarks about the City of London. This is beginning to become common form. One might have thought, and I say this with respect, listening to the hon. Gentleman, that the strength of sterling and sound monetary policy are matters of concern only to the City of London. I must say that I agree with my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) that the hon. Gentleman's approach to the affairs of the City seem to be superficial in the extreme. Certainly, if his approach be taken at its face value, then the arrival of a Labour Government would be followed by rip-roaring inflation.
To the hon. Member for Manchester, Cheetham (Mr. H. Lever) I offer my sincere and genuine gratitude, gratitude for making a speech much shorter than I anticipated. His views against the abolition of Schedule A and fiscal discrimination in favour of areas of high persistent unemployment are by now well known to the House, although not, perhaps, quite so well understood.
My hon. Friend the Member for Crosby (Mr. Graham Page) referred to a number of important questions of principle in the Bill, and I know that he will not expect me to go over the ground again, but I should like to say three things to him. On the question of alteration of the layout of the P.A.Y.E. tax tables, I have written to him and explained why, in our view, it would not be wise to change them at this time. I assure my hon. Friend that the Inland Revenue has not written off the proposals which he sent to me.
Secondly, I have not myself seen the Inland Revenue note to which he referred which explains why a maintenance claim cannot be allowed for an owner-occupier in view of the abolition of Schedule A. In view of what he said, I will look into this immediately and see whether any change is desirable.
I take note of the point my hon. Friend raised about the Stamp Duty on receipts, a point which was contained in an

Amendment which was not selected and which is not within the scope of the Bill.
Every year the exhilaration of Budget Day slowly gives way to a mood of grim determination and, I must frankly admit, sometimes dark despair when we sit in the Treasury with our advisers and struggle to translate the poetry of the Budget proposals into the prose of the Finance Bill. This year one can say without any qualification that the House of Commons has played a larger part than usual in shaping the Bill. I reminded the House when I moved Second Reading seven weeks ago that nineteen Clauses and several Schedules were needed to get rid of Schedule A. In the course of the last few weeks, as I have done my best to explain some of the Clauses and the Schedules, I have realised why it was necessary to deal with the matter in this way. I hope that the House will not take advantage of a confession if I say now at this late hour that I am already beginning to forget why they are necessary.
One hon. Member referred to the drafting of the Bill and seemed to think that there was cause for some complaint in the fact that in a number of respects we had had in the course of the passage of the Bill to alter the wording and make minor drafting Amendments. I can only tell the hon. Gentleman that at that moment my right hon. Friend the Chancellor of the Exchequer whispered to me and said, "The truth is that the Parliamentary draftsmen have had an appallingly difficult task and deserve our gratitude". This is so. I admit frankly that I have some sympathy with the hon. Members for West Lothian (Mr. Dalyell), Rotherham (Mr. O'Malley) and one or two others, who pointed out, fairly, that some of the provisions of the Bill are extremely difficult to understand. This is another point. The trouble is that one tries to cover every conceivable eventuality and circumstance which might be relevant, so as to avoid misunderstanding and litigation at a later stage. Further, we in this country do our best to be scrupulously fair as between one taxpayer and another. It is, in a way, this objective of perfectionism which leads to the complexity.
I join the hon. Member for Sowerby in expressing gratitude to all those who


have worked unceasingly behind the scenes. I was very pleased that he reminded the House of the enormous amount of work which is consequential upon my right hon. Friend's proposals, work not only at the Inland Revenue headquarters and at the Treasury but work which goes on right down to the tax offices themselves.
Nobody will deny that as a result of its passage through the House the Bill has been much improved. I agree with my hon. Friend the Member for Crosby that the fact that so many changes have been made is not so much a reflection on the preparation of the original version of the Bill as a tribute to the effective working of the House of Commons and, I might say also, to the public-spirited approach of the professional bodies. It is a significant fact that more than two-thirds of the 99 Government Amendments which we debated earlier this week on Report were tabled in response to points raised either by right hon. or hon. Members or by the various professional bodies. Let no one say that in legislation concerning finance this House acts as a mere rubber stamp, although, as my hon. Friend the Member of The Wrekin (Mr. W. Yates) has now left, I have my hopes that it is just possible that the Third Reading of the Bill will be unopposed.

Mr. Lubbock: Would the hon. Gentleman care to deal with the point I raised about the interpretation of Clause 15(1,c) in its application to local authority receipts from games fees?

Mr. Barber: I took note of what the hon. Gentleman said. This is a matter to which my hon. Friend the Solicitor-General referred the other night when it was raised by my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth). I have taken the further point the hon. Gentleman raised this morning. I do not think that the Third Reading of the Bill is in any event an appropriate moment for me to go into such details. A second reason I can

give the hon. Gentleman for not going into them now is that I could not do it off the cuff. A third reason is that it is a quarter-past one. I am not being too light-hearted about this and I can assure the hon. Gentleman that I will look very carefully again at what he said and write to him and do my best to explain fully what the present position is.

Question put and agreed to.

Bill accordingly read the Third time and passed.

COMMONWEALTH DEVELOPMENT [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to extend the area of operation and alter the name of the Colonial Development Corporation, and to amend sections 1, 4 and 6 of the Colonial Development and Welfare Act 1959, it is expedient to authorise any such increase in the sums which, under the Overseas Resources Development Act 1959 or the Colonial Development and Welfare Act 1959, are authorised to be issued out of the Consolidated Fund, paid into the Exchequer, raised by borrowing or defrayed out of moneys provided by Parliament as is attributable to provisions of the said Act of the present Session—
(a) raising from £315 million to £340 million the limit imposed by section 4 of the Colonial Development and Welfare Act 1959 on the aggregate amount of the payments which may be made out of moneys provided by Parliament for the purpose of schemes under section 1 of that Act;
(b) replacing the limit imposed by the said section 4 on the aggregate amount of loans under section 2 of the Colonial Development and Welfare Act 1959 which may be approved in any financial year, and raising from £100 million to £105 million the limit so imposed on the aggregate amount of all such loans;
(c) amending the Overseas Resources Development Act 1959 or the Colonial Development and Welfare Act 1959 other wise than in respect of the limits imposed by those Acts respectively on the aggregate amount outstanding in respect of advances to the Colonial Development Corporation or of the payments and loans mentioned in paragraphs (a) and (b) above.

Resolution agreed to.

COMMONWEALTH DEVELOPMENT BILL

Considered in Committee.

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

Clause 1.—(EXTENSION OF POWERS AND RE-NAMING OF COLONIAL DEVELOPMENT CORPORATION.)

1.15 p.m.

Mr. G. M. Thomson: I beg to move, in page 1, line 9, to leave out "as defined by that Act".

The Chairman (Sir William Anstruther-Gray): I understand that it would be convenient to the Committee to discuss with this Amendment the Amendment in page 1, line 11, leave out "11th February 1948" and insert "15th August 1947".

Mr. Thomson: Yes, Sir William. That will be for the convenience of the Committee as they deal with the same point.
As I think the Under-Secretary knows, the purpose of the Amendments, of which we gave warning on Second Reading, is to allow the very welcome operations of the Colonial Development Corporation in the independent Commonwealth to extend still further India, Pakistan and Ceylon, the Commonwealth countries which became independent in the post-war period but before the qualifying date of the parent Act and of the Bill. There was some discussion on this point on Second Reading. We gathered from the Government at that time that their initial reaction to this proposal was not a hopeful one. They have had some time to reconsider the matter. It is an important and valuable proposal.
The Colonial Development Corporation itself probably feels that the extension of its powers under the Bill is enough for it to be going on with in the immediate future. However, this is in many ways an enabling Bill. It will establish the structure of what will be the Commonwealth Development Corporation for a number of years ahead. We on this side do not suggest that the extra powers which would be given by the Amendment would immediately have to be operated by the new Commonwealth Development Corporation. We suggest that it is important that the Corporation should

have the right to operate throughout the whole of the developing Commonwealth in the years immediately ahead, if it wishes to do so and if it is asked to do so. It is impossible to call it a Commonwealth Development Corporation—a change that we welcome—if it is to be debarred from effectively operating in three of the principal developing countries of the Commonwealth.
I do not see in logic how it is possible to call it a Commonwealth Development Corporation if it is enabled to operate in that great and populous country, Nigeria, but prevented from operating in that other great and populous country, India. I do not see how it can be called a Commonwealth Development Corporation if it is allowed to operate in an Asian and partly Moslem country like Malaya, but is prevented from operating in Pakistan. I do not see how we can properly call it a Commonwealth Development Corporation if it is enabled to operate in the newly independent islands of the Caribbean, but prevented from operating in the newly independent island of Ceylon.
Each of the three nations which would be incorporated by this Amendment could usefully take advantage of the capital and know-how provided uniquely by the C.D.C. Perhaps it might be argued that in India, where they already have very elaborate planning machinery, the need for the services and resources of the C.D.C. to be made available is less than in the other two countries. In Pakistan particularly, which I had the good fortune to visit recently the possibilities of the C.D.C. operating are very considerable.
When my right hon. Friend the Member for Dundee, West (Mr. Strachey) and I were there a few weeks ago we were able to have long talks with the two industrial development corporations which operate in East and West Pakistan, respectively. They are very impressive organisations. They already have a very good record of achievement behind them in industrialising a part of the sub-continent which started with very serious handicaps in this respect.
The interesting thing about these Pakistan development corporations is that their structure bears a remarkable resemblance to the structure of the C.D.C. They operate in the same way.


They have the same aim of establishing new industry, building it up successfully, and then trying to persuade local entrepreneurs to take it over. The resemblance between the two bodies is a very close one.
I understand that the Pakistan industrial development corporations had close consultations with the C.D.C. over recent years. It may well be that the present structure in Pakistan owes something to those consultations. If so, that is a further contribution which the C.D.C. has made in a country in which it is not allowed at the moment to operate. The practical point is that I should have thought it possible to marry the operations of the C.D.C. with those of the Pakistan industrial corporations without too much difficulty. Any fear that the C.D.C. had that this would be a big extra drain on its trained manpower would be minimised in that particular situation.
In Pakistan, of which I have some personal knowledge, I should have thought the arguments for allowing the C.D.C. with its new powers to operate are very strong indeed. I am not so qualified to talk about the circumstances in Ceylon, Ceylon is a relatively small, yet tremendously important, developing nation in the Commonwealth. I should be extremely surprised, from the little I know of economic conditions there, if the C.D.C. could not make a very useful contribution. It is for these reasons that we have tabled this Amendment. We hope that the Under-Secretary will give it sympathetic consideration.

Mr. R. W. Sorensen: I wish to support the plea made by my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson). I am sure that many have emphasised the significance of the transition from the Colonial Development Corporation to the Commonwealth Development Corporation, as it is named in the Bill. It is of very profound significance in that the colonial empire has largely disappeared and in its place has emerged the Commonwealth.
I can appreciate why up to now the Corporation has not covered India, Pakistan and Ceylon. They were never Colonies but were Crown possessions. I suppose that is one of the legal factors which were borne in mind by those

who drafted the Bill. The mere fact that the Bill is called the Colonial Development Bill ignores distinctions of Crown possessions and Colonies. It seems that on that ground alone, if the intentions of the Bill are to be logically applied, India, Pakistan and Ceylon should not be left out of its beneficial provisions. I am glad that that has been emphasised by my hon. Friend.
I support this Amendment also on the broader grounds that this is one of the means by which we can still further implement the principle of Commonwealth. It has often been said that it is difficult to define the nature of the Commonwealth. In many respects there are differences and diversities in policy and economy. Apparently nothing binds the Commonwealth together except an emotional attachment, but here is a means, particularly if we include these other vaster territories of India, Pakistan and Ceylon, whereby we can help to give material substance to the whole concept of Commonwealth.
I know that because Commonwealth is so different in its significance from empire some are less enthusiastic about Commonwealth than they were about empire, but I do not share that lack of enthusiasm. On the contrary, I rejoice very much that the much nobler conception of Commonwealth, based as it is on voluntary co-operation compared with the imposition of alien will, has taken the place of the old conception. I hope that the Under-Secretary will accept this and that we may further integrate this very noble concept, which is a tremendous and inspiring example to the whole world.
I too have been in India this year, seeing my friends out there. I was much struck by two facts, first by the warmth of friendship which exists there for this country. There was always friendship, but it is warmer now than ever before. It has been particularly stimulated by the readiness with which we went to the aid of India when she was in crisis through the aggressive action of China in the early part of this year and the latter part of last year.
I believe we should continue not merely military aid but economic aid to assist India. Here is a way in which that can be done. It is essential that we should be at least as ready to extend economic aid to India as we were to


extend military aid. Otherwise there might appear—although I think it would be fallacious—to be some substance in the contention in certain quarters that we wish to assist with military aid only for some ulterior purpose. I do not share that idea. We should be as eager to do all we can to extend economic aid as we were to extend military aid when India was in peril.
This is not to assume that a great deal has not been done. I know that both from our own resources and from external resources through the consortia of many nations very substantial aid has been extended to that country. There is no logical reason why we should not use this channel for the same purpose. Certainly India and Pakistan need all the aid we can possibly extend to them. I cannot understand why, as was suggested by my hon. Friend, the C.D.C. seems reluctant to accept this and to extend its responsibility. I should have thought that although it might place a very heavy burden on the Corporation and it might be entering wider fields than at one time it anticipated doing, it should eagerly grasp this opportunity.
1.30 p.m.
I am not sure whether this is in order, but by way of illustration I can tell the Committee that, although a great deal has been done by the Governments of India and Pakistan themselves and a great deal has been done by external aid, I have seen with my own eyes the tremendous need for all the aid there can possibly be. I was happy to be able to inform the people of ten villages in the southern part of India that my constituency had adopted these ten villages and raised a very substantial sum of money, through the initiative of out local mayors, supported by people of all parties, and would very shortly be sending out about £5,000 in order that they might sink wells. These wells will enable those people to have two crops a year instead of one, without which they would be consuming per head only half the calories which we consume in this country.
I put that as one illustration of the tremendous need which exists. In spite of great irrigation projects like the Bhakra-Nangal dam, in spite of the construction of steel plants and indus-

trial plants, in spite of a great deal which has been done internally, we have to face the fact that, unfortunately, the third Indian five-year plan, based as it is very largely on the success of the first two five-year plans, will be grievously affected not only by what has happened recently in the conflict with China but by the circumstance that, owing to the cumulative beneficial effects of improved sanitation and improved medical and hospital services, the population of India is now growing alarmingly at the rate of 8 to 9 million a year. This population problem, of course, imposes its own strain on the country's economy.
Whatever may be done about the curtailment of population is another matter. We have before us now an excellent opportunity really to demonstrate and vindicate our appreciation of India. Only last week, we had with us that very great scholar, Dr. Radhakrishnan, the President of India, and we extended to him, rightly, a very warm welcome indeed. I had the opportunity of talking to him at some length when I was in India, and, on this occasion, more briefly. We could do a great deal to emphasise the sincerity of our welcome to him and our recognition that India, Pakistan and Ceylon are equals with us within the Commonwealth by extending the scope of the Bill in the way proposed.
I hope that the Minister, appreciating the pleas which we have made from this side and the fact that there is now this change and the availability of funds for ex-colonial territories, will not allow the circumstance that these other countries were not, strictly speaking, colonial territories to deter him from saying that the scope of the Bill should be extended to include them and do something really impressive to show the world that we believe in the principle of Commonwealth.

The Under-Secretary of State for Commonwealth Relations (Mr. John Tilney): The Committee will have listened with much interest and sympathy to what the hon. Members for Dundee, East (Mr. G. M. Thomson) and for Leyton (Mr. Sorensen) have said. I add my appreciation of the work of the President of India, whom I had the privilege of meeting in India last November and recently here in London.


Both hon. Gentlemen are inclined to forget that the Corporation may already act in India, Pakistan and Ceylon as managing agent and perform advisory functions. We really come down to a question of further cash.

Mr. G. M. Thomson: Is there any instance of the Corporation having been asked by an independent Commonwealth country to act as managing agent in that way?

Mr. Tilney: The Corporation has not taken such action so far, but it has the power so to do. It may be that, in the coming year, it will act as managing agent, but it has not so far done so.

Mr. Sorensen: I can understand how the Corporation could give advice, but it has no power to propose the advance of money, has it? That is where the difference lies.

Mr. Tilney: I agree that it has no power to produce money from the United Kingdom Treasury, but it has power to act as managing agent and perform advisory functions in any independent Commonwealth country under Section 7 of the Overseas Resources Development Act, 1959. We ought to bear that in mind. The question really comes down to one of another channel for extra cash for development.
I was much interested in what the right hon. Member for Dundee, West (Mr. Strachey) said on Second Reading:
I do not say that India is a very suitable territory for the C.D.C. It has reached a stale of development in which it does its own planning and a great deal of its own technical assistance. The scale of the Indian economy is so large that it rather dwarfs the Corporation."—[OFFICIAL REPORT, 19th June, 1963; Vol. 579, c. 562.]
Those were very wise words.
In fairness to the Corporation, I should tell the Committee that the deputy chairman and the managing director told me in conversation yesterday that, if given the opportunity, the C.D.C. would welcome the inclusion of India, Pakistan and Ceylon within its area of operations, although they would not expect, in the early stages, to be able to use any of the powers extensively. But I should also tell the Committee that the Corporation never put forward that suggestion in the conver-

sations which we had with the Corporation during the past weeks, and I repeat that it has never as yet used its powers of management which it could have used in any of these three territories.
When I first heard the suggestion on Second Reading that these Commonwealth countries should be included, my first reaction was one of sympathy towards the idea, but I have since weighed further the arguments for and against. I feel that we should bear in mind that India, with nearly 450 million people, and Pakistan, with nearly another 100 million, represent far more than half the whole Commonwealth and would put the whole operations of the C.D.C. out of balance. As the right hon. Member for Dundee, West said, it is really a problem of scale.
We are already helping India very considerably. Our total aid commitment to India has amounted to nearly £179 million. To this should be added the £30 million recently committed in the Indian consortium, making a total of over £200 million. Our commitments to Pakistan amount to about £48 million, to which should be added the £8 million recently committed in the Pakistan consortium, making a total of £56 million. Thus, our total aid disbursements to the three countries have been, per annum, in three out of the last four years, £30 million, while our total aid disbursements to all under-developed countries have been about £150 million. Thus, our aid to these three territories in recent years has been between one-fifth and one-quarter of our total aid. This, I think answers to some extent the point made by the hon. Member for Leyton. We have certainly not forgotten the need to help India. To those figures, of course, should be added military aid as well.

Mr. Sorensen: I appreciate that, and I said that substantial aid had been given. However, in India it works out at less than 10s. per head. Surely, it is advisable not to confuse military aid, which, of course, is of a different order altogether, with economic aid.

Mr. Tilney: The figures I have mentioned are of economic aid. To them we should add aid from the Commonwealth Development and Finance Corporation, which has amounted to nearly £7 million to the three countries in the form of


investment. But again it is fairly substantial.

Mr. T. H. H. Skeet: Would it not be right to say also that direct investment in India is considerable. The figures given so far of economic aid under the Export Guarantees Act from 1949 and 1962 are all good. But would not it appear that the total of our aid to Pakistan has been even more considerable, compared with other nations in the Commonwealth?

Mr. Tilney: I have left out private investment from those figures. But I do not think that arises under this Bill.
I believe that were these territories included, there would be obvious pressure on the part of one, possibly of all, the Governments concerned sooner or later to raise the ceiling of aid above the £130 million provided by this Bill. I would again refer to what was said during the Second Reading debate by the right hon. Member for Dundee, West:
It is for that reason that I proposed no raising of the ceiling".—[Official Report, 19th June, 1963; Vol. 679, c. 595.]
It seems to me that the whole scale and balance of the operations of the C.D.C. would be put out if we included this vast sub-continent with all its huge needs. I accept what was said by the hon. Member for Leyton about the need to help in respect of the poverty per head of population. But the amount of money available to the C.D.C. is limited. I only wish we were richer and that we could afford more aid in every way. But I do not think that we are doing badly.
If we exclude India, obviously we must exclude Pakistan as well and so we are left with Ceylon. Already we have very substantial British private investment in Ceylon. As I said on Second Reading, it was the idea that when the countries became independent they should rely largely on private enterprise to produce the money for their development. That was changed at the Montreal Conference of 1958.Iam told that the City of London holds the view that the political and economic uncertainty in Ceylon has resulted in a virtual cessation of foreign investment, and that sufficient foreign investment is unlikely to be attracted

because of the present restriction on remittances, profits, dividends and other income earned by foreign countries and by the continued extension of public ownership.
If the policies of the Government of Ceylon gave greater confidence, no doubt private investors would be ready to invest additional sums. It is potentially rich and a lovely island and it has a favourable balance of trade with this country. We all hope that Ceylon will overcome her present economic difficulties, and that private enterprise, in partnership with the people of Ceylon, will be able to increase the wealth and wellbeing of that very lovely island.
As I have said, I must advise the Committee that I believe that our present channels of aid to India are the best. I do not want to cramp the operations of the Corporation elsewhere by a demand to them, and by putting a pressure on them, to invest their limited funds in the sub-continent of India. I believe that the present channels are well suited especially to India's balance of payment problems. A line must be drawn somewhere and we have accepted the line which was drawn by the Labour Government in 1948. We believe that the Corporation has enough on its plate. There will be other overseas resources development legislation in future years. We are bound to have another CD. and W. Fund Bill by 1966 and possibly the sub-continent of India could have been added at that time. But I am sure that it would be wrong to add those three countries now. Having weighed up the arguments for and against, I must advise the Committee to reject the Amendment.

1.45 p.m.

Mr. G. M. Thomson: This is an extremely unsatisfactory and unimaginative response from the Minister. It is all the more unsatisfactory because he gave the extremely interesting information that once this matter was pressed by the Opposition during Second Reading, the C.D.C. told the Government that it would be willing to see these powers incorporated into the Bill. I should have thought that any Minister who told the Committee he was initially sympathetic to the proposals of the Opposition would have considered that this intervention by the C.D.C. tipped the balance.
The Minister's arguments do not seem to me very persuasive. The suggestion that there are existing powers in the Act for the Corporation to act as a managing agent in the Indian sub-continent is irrelevant because the experience since the Act was passed has been that this provision is a complete dead letter. One would expect that in the case of India, for all the reasons that the Minister has given, India does not need a management agency technique from a Government Corporation in this country. The unique value of the C.D.C. is that it combines capital assistance with experienced knowledge in developing the under-developed areas. It is that combination which I should have thought of interest to India despite the fact that India has considerable facilities of her own and, as the Minister said, the whole scale of Indian development—one of the greatest and most populous countries in the world—in a sense overshadows the operations of C.D.C.
That does not mean to say that the C.D.C. operation in India, even though it were small against the whole scale of the Indian economy, might not be immensely valuable in itself and helpful to India and to our relations with India. The Minister said, as an argument against this, that inevitably it would raise the total ceiling of aid to India. We are not arguing about the total volume of aid. We are proposing that a new technique should be offered to India and to other countries in the sub-continent. But in the Second Reading debate, not unreasonably, the Government took credit for the fact that it was proposed over the years to raise the total ceiling of overseas aid to something between £180 million and £220 million. So if the only argument against the proposal is that some years hence it is likely to mean that the total help to India will be greater, I cannot see that this presents much of an obstacle.
Most people would feel that we ought in the years ahead greatly to increase our aid to the countries of the subcontinent as well as to other developing countries in the world. I would put India very high in the list of priorities because in many ways the battle for democracy in a developing world will be won or lost in India. There is, I think, a strong case, for India—perhaps

more than other countries—has the manpower and economic equipment to make the maximum use of any help given.
In moving the Amendment I emphasise that I thought an extension would be important to the three countries and particularly to Pakistan and Ceylon. I was somewhat startled by the Minister's rather bland argument that because he felt obliged to dismiss the proposal for India he must, automatically, apply the same argument to Pakistan and Ceylon. I cannot imagine that that argument, if it ever gets beyond the confines of this Chamber, is likely to improve relations between the countries on the Indian subcontinent.
In rejecting the Amendment the Government are creating two worlds within the developing Commonwealth. In some ways they will get the worst of both worlds. The independent Commonwealth countries of Africa and elsewhere which come within the scope of the Bill will wonder why they should get it while the slightly older developing Commonwealth countries should not. All the old suspicions about certain countries being nearer Commonwealth status will be stirred up by this unfortunate rejection.
Equally, the countries of the subcontinent are bound to wonder why, after all our protestations about the importance of aid to the area, this modest interesting and extremely useful device of giving capital aid accompanied by the know-how to use it should be denied to them. The Under-Secretary said that a line had to be drawn somewhere. I cannot think of a more illogical place to draw it than the one he prefers. The only justification for it is the fact that it was the line drawn by the Labour Government during the immediate post-war period. The hon. Gentleman used an illogical argument because the body set op at that time was a corporation confined to the boundaries of the dependent colonial territories for which we were responsible and, therefore, the independent Commonwealth countries of India, Pakistan and Ceylon were automatically excluded.
The whole situation has changed since then and, in the light of that change, the Under-Secretary should have accepted—especially since the C.D.C. has


said that it would like it—our proposal to allow the C.D.C., in due course and when asked, to operate in the Indian sub-continent.

Mr. Tilney: If the Committee was discussing total aid I would have agreed with the hon. Member. But we are already giving massive aid to India and it is not true to say that the only justification I have put forward is the argument that India, Pakistan and Ceylon were never within the territory of the Corporation. We want to give help to India, but it is a problem of scale. Pakistan is a very large country—the second largest in the Commonwealt—and the same argument can apply in that case, but to a slightly less degree.
I repeat, our present channels of aid to India are well suited to that country. If we opened the territory up to the C.D.C., within a very short time there would be pressures to divert its existing funds from poor colonial territories or independent territories which may be just as poor as the Indian sub-continent, or else to raise the figure of £130 million. I must, therefore, urge the Committee to reject the Amendment.

Amendment negatived.

Amendment proposed: In page 1, line 11, to leave out "11th February 1948" and insert "15th August 1947"—(Mr. G. M. Thomson):—

Question, That "11th February 1948" stand part of the Clause, put and agreed to.

Mr. G. M. Thomson: I beg to move, in page 1, line 14, at the end to insert "(c) the Maldive Islands".
We have tabled the Amendment to find out from the Government what is the present status of the Maldive Islands in relation to our aid policy and whether they are not to be entitled to come within the operations of the C.D.C.
The Maldive Islands are by no means the least important of the areas of the world which come under our protection and for which we have a responsibility. I suppose that they are among the parts of the world about which hon. Members know the least. I cannot easily recall many occasions when their affairs have been discussed in Parliament. If, for no other reason, this may justify our having tabled the Amendment.
I recall that on one occasion I received a letter from Male, the capital of the Maldives, about the political difficulties existing between the Maldivian Government and this Government. I went to see the present Minister's predecessor at the Commonwealth Relations Office. He had himself recently returned, I gathered with some difficulty, from a visit there to try to improve relationships. We had a useful and interesting talk and then the question arose as to how my reply to my correspondent was to be delivered because I gather that there are no regular postal services to Male. He offered to arrange for my letter to be dropped by parachute into Male.

Mr. A. P. Costain: The hon. Member may like to know that I have been in correspondence with people on the islands. They write to me and no postal difficulties have been experienced.

Mr. Thomson: In which case communications have improved since my experience. The problem of communications inside the area—between the southern group where our base is established and beyond the capital of Male in the north—may have caused the sense of remoteness which is associated with the area. Despite this, they are important islands and their friendship is important to us.
I understand that the R.A.F. staging post on the Addu Atoll, in the south, is now extremely important. I am told that in the first year of operation of the base more than 600 aircraft, 12,000 passengers and 1½ million tons of goods were handled. In our strategic interests, goodwill with the people of Maldive is extremely important. It is for this reason that my hon. Friends and I wanted to press that the Maldives should be included in the area of operation of the C.D.C.
The Bill already includes places like the New Hebrides and the Cameroon Republic, or part of it. The least we can do is to make available the facilities of the C.D.C. to the Maldive Islands. The Maldivians want those facilities and the appropriate projects that can be undertaken. We are merely asking that the Government should be empowered to operate in the area in this way if the situation seems to warrant it. One


might find that the C.D.C. officials would find it easier to be useful ambassadors there than are the normal channels because there is this long and unfortunate history of dispute between ourselves and the Government of Maldive.
2.0 p.m
I should like this Amendment to enable us to form a better view of the case for extending the C.D.C. to the Maldives and to find out what the present position is with regard to our financial aid to these islands. I gather that under the Treaty of Friendship of February, 1960, we undertook in exchange for our staging posts in the south to provide the Maldivian Government with £850,000. I do not know for what period, although the stage post rights lasted for 50 years. £100,000 of that was to be direct grant. Immediately after that Treaty the dispute flared up again. I should be grateful to know from the Minister now, or by letter later, how much of this money has been handed over and what are the prospects for the immediate future.
Above all, I ask the Government to consider whether this Bill may not provide a modest opportunity to offer the Maldives the hand of friendship and improve relationships with them.

Mr. Sorensen: I assure the Minister that I have no ulterior political motives in supporting the Amendment of my hon. Friend, and I am sure that he will agree that any electoral advantages in regard to this Amendment will be of a very small nature indeed. I am certain that not one in a thousand in my constituency would know what I was talking about if I referred to the Maldive Islands. Quite frankly, I think that a good many of us in this House would not either.
I hope that the Minister will say a word about this interesting remnant of our imperial empire and why it has been left out. I have not been to the Maldive Islands. I am glad that the hon. Member for Folkestone and Hythe (Mr. Costain) is apparently in close touch, and perhaps he might add interesting information by intervening in the debate. Meanwhile, I ask that we should have some explanation why it has been left out.
I can understand why the New Hebrides is put in a particular category.

I understand the nature of that particular territory, but I cannot see why the Maldive Islands should not almost automatically have been included, because we are engaged now and shall be doing so in the months ahead in sweeping up all the little pieces left over from the Empire of the past. This is one of those little pieces. Whether they are or are not justifiably in some separate category, it seems to me that they should not be put at a loss because they are not in that strange category. Surely they can benefit as much as other islands recognised as ex-Colonial Territories. Why penalise them because they are apparently in some strange category? I should be glad to hear from the Minister why he does not favour our Amendment, bringing these Islands into the general orbit of the Bill.

Mr. Tilney: The Committee may like to know that a considerable amount of aid has been given to the Maldives: Traditional fishing equipment £50,000; dispensing ship £50,000; a power station at Male, £75,000; a boat-yard and engineering repair shop, £20,000; an Inter-Atoll ship £45,000 and, with miscellaneous provisions, a total of £260,000. That has been completed, and in hand are the following three items: £225,000 for harbour and oil storage; £145,000 for a hospital and £100,000 for marine engines, making in all £¾ million.

Mr. Thomson: We are most grateful to the Minister for giving these figures. Could he clarify one or two points about the authority under which they are given? Do these relate to the £850,000 under the 1960 Treaty of Friendship or does any of it come under CD. and W. Is some of it related to the base itself and does it come under our military and Air Force expenditure?

Mr. Tilney: I should like notice of that question. Perhaps the hon. Gentleman will put down a Question later. I should like to confirm that the position of Her Majesty's Government remains as set out in the second paragraph of the letter from Lord Alport, or Mr. Alport as he then was on 4th February, 1960, where he reaffirms to the Prime Minister of the Maldive Islands the
United Kingdom Government's desire and concern to promote an early reconciliation between the inhabitants of Addu Atoll and


the Government of His Highness the Sultan. I accordingly give you a further assurance that the United Kingdom Government will do all that they can to bring about conditions which will enable the authority of His Highness the Sultan to be restored peacefully in the Atoll.
I am advised that the insert of this Amendment is unnecessary since because in Clause 1(1,a) of the Bill the Maldive Islands are included as being an overseas country or territory within the Commonwealth.

Mr. Thomson: We are obliged to the Minister for giving us that very interesting information. Does this mean that the Maldive Islands will now qualify for consideration under CD. and W.?

Mr. Tilney: I understand that the aid of £¾million is under the Treaty, but it certainly qualifies for operation by the C.D.C. although I do not think that the C.D.C. at the moment has any possible project in the Maldives.

Mr. Thomson: In view of the very helpful and informative reply which the Minister has given us on this point, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. G. M. Thomson: I beg to move, in page 2, line 4, to leave out from "fit" to end of line 7.
This is an exploratory Amendment put down in order to obtain from the Minister an explanation of the meaning of this provision in relation to two points. We are a little puzzled why the important provision of the parent Act with regard to consultation with local inhabitants and employees should be left out in respect of the independent Commonwealth countries which will now qualify for the new C.D.C. projects. We assume that this is out of respect for the complete sovereignty of the independent Commonwealth countries, but we should like to have that matter cleared up quite definitely.
The main reason for the Amendment is to draw attention to the very grave importance in the non-independent territories that remain of the C.D.C. developing the closest possible association with the local peoples. The C.D.C. enjoys a well-deserved reputation for getting on well in the territories in which it is operating, but I do not think that anyone who has seen it operate in the field

and who is, as all of us are on both sides of the Committee, a friend of the C.D.C. would feel that there was a good deal more that could be done.
The parent Act laid it down pretty definitely that local interests should be consulted. Indeed, it laid down rather clearly the form in which they should be consulted, and it said that the Corporation "shall" appoint committees. It was mandatory. I should be interested to know in how many cases the Corporation has appointed committees in many of the independent territories in which it operates. My guess is that it has been rarely, if ever. Why has it not been done?
I had the impression from a number of areas where the C.D.C. operates that this method of forming local advisory committees might be well worth trying out. There is often difficulty in persuading local people of the full purposes and the difficulties which the C.D.C. inevitably faces in many of its projects. It is vitally important, especially when most of these territories are coming increasingly nearer the full state of self-government or of independence, that the maximum explanation should be given. The C.D.C. could increasingly spend money on what might be called public relations. I am told that this varies from region to region, but in any case the Corporation could do more than it does.
The other point which I would press is that the C.D.C. should do everything it can in independent territories to encourage good trade union practices. I should have thought that there was a great deal to be said for the Corporation appointing some senior officers on its staff simply for the purpose of promoting good industrial relations. The Under-Secretary of State for Colonial Affairs, whom we are glad to see on the Government Front Bench, is spending a great deal of anxious time at the moment with the situation in British Guiana. This is an industrial situation which now has highly explosive political implications.
It is important that in all of these kinds of territories the best standards of trade unionism should be built up. The C.D.C, based on this country, can make a notable contribution in establishing good standards of employer and employee relationships, and in creating a more constructive climate of opinion in this respect. The Amendment was


tabled partly to press on the Minister, and through him on the Corporation, that more attention might usefully be paid to this problem.

Mr. Sorensen: I am most impressed and enlightened by the amazing scope that is apparently implicit in the Amendment. I did not think that it could cover so many different subjects. I would emphasise one of the pleas made by my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson), and that is that as far as possible everything should be done to bring the indigenous inhabitants into close co-operation in and understanding of the projects undertaken by the Corporation. The reason why in the past I have tried to perform some modest service in encouraging the freedom and independence of colonial territories has been that I am conscious of the fact that they are apt to blame the imperial Power for all the ills that they suffer.
If the inhabitants could be involved and made to realise that these problems are not necessarily due to Powers like ourselves but are inherent in the situation, it would be all to the good. Evasion of tax is among the failings of many people, including the inhabitants of the emerging territories. There should be co-operation between the activities of the Corporation and the local people so that the inhabitants might face the facts and realise that things are not always as easy as they think.

2.15 p.m.

Mr. Tilney: I can confirm that the latter part of Clause 1(3) which excludes Section 8 and Section 9(2,b) of the principal Act relating to independent Commonwealth countries, is there because it would not be suitable for the United Kingdom Parliament to legislate for independent countries. It is really for the Government of the independent countries concerned to consider the interests of the inhabitants. I said on Second Reading that my right hon. Friend would use his power to instruct the C.D.C. to consult him so that the United Kingdom Government can be sure that the Government of the independent country is also consulted before any operation of the C.D.C. starts in that country. If that is done, the Commonwealth Development Corporation

obviously will comply with the local law.
I understood the main part of the hon. Member's argument, however, to be directed to the formation of committees in the colonial territories which are still governed from Whitehall. My advice is that no committee has been appointed, but in each case the Corporation has to satisfy the Colonial Office that the welfare of the indigenous people has been considered.

Mr. G. M. Thomson: The latter part of the argument is not wholly satisfactory. We were glad to hear from the hon. Gentleman that he would be pre pared to have talks with the C.D.C. about these matters. It seems strange to us that a Government who, in 1959, pressed this mandatory proposal on the C.D.C. of appointing committees should calmly say this afternoon, four years later, that not a single committee has been appointed and that there is nothing much that we ought to do about it.
I would recommend the hon. Gentleman to ask any visiting politician from some of the remaining colonial territories what he thinks about the operations of the C.D.C. in his territory. The first reaction generally is a rather blank one. The politician has no great knowledge of what exactly the Corporation is doing in the territory. If pressed and asked about some of the projects in his territory under C.D.C. auspices or administration, one hears grumbles about this and that. I should have thought that there was a good deal of scope for consultation and co-operation between the C.D.C. and local people. I hope that the hon. Gentleman will look at this problem.
I should have thought also that there was scope for a good deal of co-operation and consultation in the field between the C.D.C. and the Colonial Office. One had the impression in several parts of the world that the C.D.C. operated quite separately from the local administration and that there could have been better liaison so that the work could be carried out successfully.
I should like to see the C.D.C. advertise itself more. I should like to see it put up big notices saying, "This is a C.D.C. operation" and add that it was being helped willingly by taxpayers in this


country. I do not see why we should not blow our own trumpet more about this. Other people blow their own trumpets and we suffer in terns of good economic relations compared with other countries because we give a good deal of economic assistance in grants-in-aid for administration. One cannot put up a great notice board outside a local Treasury, but where there is a physical project, such as a dam or timber mill being built, we ought to tell the people what is being done and what part this country is playing in it.

Mr. Tilney: I do not object to anything which the hon. Gentleman has said, and the need for consultation may well be there. I have no doubt that the Corporation will take note of the hon. Gentleman's remarks, but I would point out to the Committee that committees of this kind are mandatory only when their appointment is considered by the C.D.C. to be needed and that the local Government are always consulted before operations start.

Mr. Thomson: I put down the Amendment for probing purposes. In view of the explanations I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

Mr. G. M. Thomson: I should like to take this opportunity to explore a bit further the very interesting information which the Minister gave us about the Maldives coming directly under the terms of this Bill. The Maldives, as I understand it, are a State under our protection. If they come under this Bill and the C.D.C. is empowered to operate in the Maldives, then I should like to ask the hon. Gentleman to find out whether the C.D.C. is also able to operate, for instance, in the Persian Gulf States which come under our protection and which seem to me to be in exactly the same legal status as the Maldives. There is also the question of Tonga. Does Tonga come under the C.D.C? It also is a protected State.
Incidentally, I think the hon. Gentleman will find, in obtaining this information which I do not expect from him at the moment—that he will be in an inter-Department tangle, because I think he will find that although the Maldives

for some reason come under his Department, Tonga comes under the Colonial Office, and the Persian Gulf States under the Foreign Office. However, they are all protected States, and I do not see any difference between them and the Maldives in this respect, and if the C.D.C. can give its valuable services and improve our relations and do a useful job in the Maldives I cannot see why the possibility cannot be considered of its operating in these other territories, too.

Mr. Tilney: I think the Committee would like to know that this is what I think the position to be, and that is that the Persian Gulf States have never been part of the Commonwealth, but the Maldives are part of the Commonwealth, as is Tonga.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2.—(AMENDMENTS OF COLONIAL DEVELOPMENT AND WELFARE ACT 1959.)

Question proposed, That the Clause stand part of the Bill.

Mr. G. M. Thomson: I should like to raise with the Minister the general level of CD. and W. aid proposed by this Bill over the years immediately ahead. Members of the Committee will recall that on Second Reading last week the Under-Secretary of State for the Colonies said when replying to the debate:
The latest estimates which I have for 1962–63 give a total of £160 million of Government aid alone. We had expected the figure to be a good deal more, and if all the commitments which we had undertaken had been drawn upon by overseas Government, if would have been more."—[Official Report, 19th June, 1963; Vol. 679, c. 599.]
The debate had hardly concluded before there was a letter in The Timesfrom one of the officials of the Overseas Development Institute pointing out that in the latest issue of the Government's "Financial Statistics" the figure of Government aid for the year 1962–63 was not £160 million but was only £147·9 million.
The first point I want to raise is that this does seem an extremely bad piece of briefing of the Minister, that he should have given the House a figure which was more than £12 million out. As we waited


for this debate to start I heard my hon. Friend the Member for Sowerby (Mr. Houghton) saying in shocked terms that he had heard a Minister talk about "only £80 million" and he hoped that he would never be guilty of such a phrase. Well, the Government in this case have been quite unnecessarily wrong about £12 million, which is a very substantial amount in relation to the aid programme, and I think that we are entitled to some explanation why this mistake was made.
But there is more than the question of inaccurate information given to the House. There is also the fact that this figure of £147·9 million for 1962–63 is very substantially down on the 1961–62 figure of £160 million and is also down even on the 1960–61 figure, so that over the last couple of years the total sum of Government assistance to developing countries overseas has dropped.
The Under-Secretary of State for the Colonies, in his winding-up speech, referred to the statement by the then Chancellor of the Exchequer, the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) in 1961 when he put a ceiling of £180 million on our total Governmental overseas aid. I well remember that at that time some of us in the House protested against the Chancellor's imposing a restriction on this form of aid and at developing countries of the world being made victims of our incompetent financial policies at home, but the astonishing fact which emerges is that we have never gone near £180 million since 1961. Last year we spent less than we did in the two previous years. I gather that the reason for this is the reason given by the Minister in justifying his inaccurately high figure, and that is that although the money was allocated, in a number of cases it was not, for various reasons, taken up and used.
As Mr. Mackintosh, Director of Studies of the Overseas Development Institute, argued in his letter to The Times, this raises for the Government a point as to whether the arrangements with regard to this aid are adequate and flexible. If there is a £12 million drop in the total sum over the last 12 months does this mean that the type and the terms of the aid we offer are of the wrong kind in certain cases?
A more immediate point which is raised is that if in fact particular terri-

tories are unable to use the aid which has been allocated to them is the Governmental machinery flexible enough to transfer this aid to other places where it is urgently needed? I think everybody in this Committee could tell the Minister of places where there are urgent priorities which are unsatisfied because they have not been able to be brought within the current budget.
Just before this debate I was talking to somebody from Swaziland about the operations of C.D.C. in that country. He tells me that in Swaziland, where there has been a good deal of trouble recently, literacy among the number of children at school is about 26 per cent, and that there are more than 30,000 Swaziland youngsters who do not get any schooling at all. He tells me that in this small but very important country nowadays there are only l6 people who emerge from secondary school in any year with the matriculation standard which would take them on to higher education. This is just one simple example which came to me casually before this debate began. One could give other examples of urgent needs in every colonial territory for which we are responsible.
It seems sad that if at the end of the day we find ourselves with £12 million under spent of the not very generous total, we have no arrangements to have this transferred to other places, and I think that the Committee is entitled to an explanation why the House was misled about the total figure and is also entitled to some sort of indication from the Government that they are considering their machinery for giving this aid so as to make sure that if in future years the targets announced are not achieved as announced they may be achieved in other ways and will not necessarily remain as figures on a slip of Colonial Office paper.

2.30 p.m.

The Under-Secretary of State for the Colonies (Mr. Nigel Fisher): It is perfectly fair of the hon. Member for Dundee, East (Mr. G. M. Thomson) to take up the point about the letter. I confess that I was a little embarrassed to see the letter in The Times. It was published almost exactly one week after our Second Reading debate. Although I have infinite confidence and faith in


my advisers, I began to wonder whether I had received a not altogether perfect briefing.
But I think I did, because it is fair to say that that was the latest estimate available in the Colonial Office at the time I gave the figure to the House. The letter gave a later but still provisional figure which, I agree, indicates that the outturn for 1962–63 may be only £148 million. This is not confirmed yet but is only a provisional figure, and even the provisional figure was not available to the Colonial Office the week we were debating the matter. That is my explanation why I gave the figure of £160 million, which was what we were working on at that time, and not the figure of £148 million.
As to the shortfall of £12 million—which is, as the hon. Gentleman says, a large figure—I have the exact breakdown. It is rather detailed, and perhaps it would be more convenient and suitable if I sent it to the hon. Member in a letter rather than read it out now. I would just tell the House that, broadly, of that shortfall £4 million is attributable to aid under the Colonial Development and Welfare Act, and £3 million of it takes the form of Exchequer loans. I will write to the hon. Member about the other items.
As to the Exchequer loans item, the £3 million represents a re-phasing rather than an actual fall in expenditure. The commitment to provide these loans remains and will have to be discharged later. I am sure that the hon. Gentleman appreciates that point. Exchequer loans are, in fact, administered very flexibly in that commitments to provide them are not entered into until the actual need is clearly shown.
With regard to the CD. and W. grants, which are in a quite separate category, allocations have to be made—as I know the hon. Gentleman understands—to the territories well in advance to enable them to plan forward. Therefore, one has to have them in the form of territorial allocations in advance. But, in so far as there can be flexibility within that framework we do our best to make sure that they are administered flexibly within the allocations. I think the hon. Gentleman would agree with me that one has to give the territories the chance

to plan forward, and, therefore, there have to be the territorial allocations which could in a sense, I suppose, be considered rigid if the hon. Gentleman wishes to put it that way.

Mr. G. M. Thomson: I accept that that is the explanation of how the hon. Gentleman gave the figure of £160 million, but I still suggest that it is worth looking at the machinery which produced the figure, because the letter which I quoted was written on 21st June, two days after our debate, and the writer was quoting from the June issue of the Government's own financial statistics, which I gather became available that day to the writer and must certainly have been available within the Government machinery some time before that. In the case of a Bill of this nature which deals with the total figure of Government assistance, it is rather surprising when a mistake of £12 million is made in a global figure which was crucial to our whole discussion, because there was the usual discussion about what percentage of the national income we were devoting to overseas purposes.
I should like the hon. Gentleman to clear up another point. Let us assume that when the final accurate figure is established the shortfall is about £12 million. Does this mean that when we receive next year's figures, whatever they are, they will include the £12 million, or will next year's figures be an entirely fresh start and will the £12 million go on being spent separately related to its year of allocation and not concealed in a future apparently inflated figure?
I appreciate the practical difficulties about flexibility in this matter, and it is certainly very important that each project should be argued out on its own merits and closely examined. I do not deny that. But let us assume that as a result of Colonial Office experience it is discovered that there is bound to be a certain shortfall. Would it not be worth while for the Colonial Office to have a floating reserve available for urgent action where money may have to be spent quickly so that over the financial year the Colonial Office is able fully to spend the amount of money which it has finally been able to wring out of a reluctant Treasury?

Mr. Fisher: On the hon. Gentleman's first point, I asked him to accept—and


I know he will—that the error of £12 million was not known to me at the time, nor to my senior adviser upon whom I rely for advice in matters of this kind, although it came to his knowledge later and he drew my attention to it the moment it became available. I will look into the question of whether it was known at any level in my office. I take the hon. Gentleman's point that it looks as if it might have been, and if it were so known, then it should have been conveyed to me. I do not really know the answer, and I am sure the hon. Gentleman will not press me for an answer now, but I will look into it.
The £12 million will go on. It will not be lost to the territories.

Mr. G. M. Thomson: Will it be in next year's total?

Mr. Fisher: The point is that this amount of money has been allocated and is available to the territories. I do not know quite what the hon. Gentleman is getting at.

Mr. Thomson: If we are discussing this subject at this time next year and the hon. Gentleman is still—I think it is an unlikely contingency—in office and tells the House, "I am proud to say that our aid figures have now risen to £172 million; this is a wonderful increase", will it mean that it is really £160 million of 1963–64 aid plus the £12 million that he failed to spend in 1962–63?

Mr. Fisher: I am sure that if I am still fortunate enough to be here at that time I shall not mislead the House in any way but will bear in mind what the hon. Gentleman has said and will not fall into the error, simply for presentational reasons, of presenting an inaccurate picture. I shall give the actual amount by which the aid has gone up and not take credit for the, so to speak, "lost" £12 million.
We get a small reserve, wrung, as the hon. Gentleman so graphically put it, from a reluctant Treasury. It is not very large. I do not know whether I am supposed to reveal this sort of thing from the Dispatch Box but it is a reserve to cover such contingencies as hurricanes and goodness knows what—things which happen for which one cannot

possibly plan, things which suddenly hit a small territory. I would point out that many of the colonies are within potential hurricane areas. It is for that sort of thing that we have a reserve. Indeed, we must have one to meet cases where immediate action and immediate cash to help are required.
But the reserve is of that nature and of that size, and I am afraid that in those circumstances it does not give a great deal of scope for much assistance over and above the territorial allocations which have been made to specific and individual territories.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Bill reported, without Amendment.

2.40 p.m.

Mr. Tilney: I beg to move, That the Bill be now read the Third time.
This Bill will give to the Colonial Development Corporation a new name and a new lease of life and a new freedom to invest in the independent countries, where it has done such good work in the past. I believe that there will be much for it to do. Its method of co-operation with Governments or private enterprise in promoting development in Commonwealth countries is a good example of Commonwealth co-operation at its best, and I am confident that it will make an important contribution to the economies of the various Commonwealth countries. It will also show that this country does not lose interest in a member of the Commonwealth after it becomes independent.
The main burden of development must rest on the shoulders of the people of the developing countries themselves—it is self-help—but this Bill shows that we are glad to help where we can. There has been a general welcome for that part of the Bill which extends the period of the Colonial Development and Welfare Acts and increases the amount of assistance given under it. I believe that both sides of the House recognise the special responsibilities that we have for helping our dependent territories, and these Acts have never been subject to party controversy.
There has been some criticism, especially during Second Reading, that the period covered by the new CD. and W. arrangement is only three years rather than the five which has become customary. The reason is solely that, in present circumstances, it is difficult to foresee requirements for longer ahead. We recognise, however, that there will be a continuing need. I am confident that the aid provided by this Bill will ease the economic and social progress of lands for which we are still responsible.

2.42 p.m.

Mr. G. M. Thomson: We welcome the opportunity of passing this Bill and to pay tribute to the work of the Colonial Development Corporation. We are glad that it now ceases to be the Colonial Development Corporation and becomes the Commonwealth Development Corporation. We think that this is a recognition, perhaps belatedly but none the less important that the developing countries of the Commonwealth, although their political status changes completely at the point of independence, still have an economic relationship to us and that our responsibility for their welfare does not cease.
We look forward to the Corporation being able to do well through its increased responsibilities, but we are sorry that the provisions for colonial development and welfare are perhaps rather more limited than on previous occasions. We hope that these will be extended to give colonial territories ample opportunity to plan well ahead. We hope that this will be used by the Government for a fairly wide consideration of the kinds of aid under CD. and W. and the method of giving it. We very much welcome this Bill.

Question put and agreed to.

Bill accordingly read the Third time and passed.

VENEREAL DISEASE

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Batsford.]

2.44 p.m.

Mr. Richard Marsh: It was on 3rd July last year that I raised in this House the problem of what I believe is the terrifying growth of the incidence of venereal disease in this country. As a result, and as often happens following debates of this type, I was bombarded with an enormous volume of correspondence. Much of it, as usual, was from cranks of one type and another, but a great deal was from ordinary people equally disturbed by the problem.
A number of people also queried, I suppose understandably, why I was interested in this matter. I will merely say that I spent some years in the Army working for Command Headquarters and concerned solely with the administration of Defence Regulation 33B. I became interested in the subject professionally then and have been interested ever since.
I make no apology for bringing the subject to this House, because I think that, though it is generally regarded as an unpleasant topic, it has none the less reached proportions which make it a matter of national concern. That is the proposition I shall attempt to put forward. Last year, I tried to introduce a Bill under the Ten Minute Rule in order to deal with the problem, and I gave some figures for new cases of V.D.
Those figures, for 1960, showed 139,506 new cases in that year compared with 94,698 in 1955.The percentages showed that the 1960 figure of new cases was 8 per cent, higher than the figure for 1959, which was in turn 12 per cent, higher than the 1958 figure. The latest figures I have—I gather that later ones are now available to the Minister—show that in 1961 new cases of V.D. reported to the special clinics totalled 141,361.
I do not think that there would be any dispute between any of us that this is a most serious problem and that it has become a national issue. In fairness, it should be said that this is not just a British problem. But this makes


the thing all the more dangerous because of the speed with which people move about the world, as we discovered when there was an epidemic of a different complaint a year or two ago. Such easy movement renders the dangers of any world increase of any particular disease that much more severe to this country.
Out of 105 countries which made returns to the World Health Organisation last year, 76 recorded a significant increase in the figures for V.D. Again the point should be made that this is not just a problem of the coloured sections of the world. I know that the Joint Parliamentary Secretary would not claim that it was, but some people would say that it was a problem purely of coloured people. There are immigrant problems but that is not the issue.
The European figures in general are deplorable. In Denmark, for example, there was a tenfold increase between 1957 and 1961. We are faced with the position where this group of diseases, very serious in nature, is growing very rapidly throughout the world, including Europe and this country. But because it is happening in other countries we have no cause for complacency. The latest figures show that complications of syphilis alone killed 600 people in 1961. More people were killed by syphilis than by tuberculosis, poliomyelitis, scarlet fever and diphtheria together. We are therefore faced with a disease that is killing a large number of people.
That is not the sole point. A very much more serious facet of this problem, and the one with which I want primarily to deal, is the increasing number of children from 11 years upwards who have venereal disease. One of the great difficulties is the widespread lack of knowledge about the disease and the myth that exists among ordinary respectable parents that it involves only the rather dark, murky underworld of professional prostitutes—places and people with whom their children could not have any contact at all—and therefore does not concern them or their families. The result of that attitude is that the ignorance continues, not only among the children but among their parents. Children do not ask their parents about this subject, but, even if they do, in the overwhelming

majority of cases the parents have no more knowledge than their children.
The latest figures show that a quarter of all infected females were between 15 and 19 years of age, and of the total increase among females between 1957 and 1961 one-third were teen-agers. It is time that it was quite brutally said that thousands of our teen-agers and a not inconsiderable number of school children have venereal disease. That is the hard, brutal fact. This group of diseases will render some of the sufferers blind, crippled or insane, will kill a few of them, and cause suffering to numbers of children who have not yet even been conceived.
There is no need to labour the horrors of some of this group of diseases. Nor is there much point in moralising. Morality is an entirely separate issue, and one of the things that this House cannot do, and never has been able to do, is to legislate very successfully about sex. On the other hand, the position is now sufficiently serious for the House to take cognisance of it and see if there is anything that can be done about it.
We can put up more posters, but the figures of the last ten years show that very little will be achieved by that. We can say that younger people should not have casual sexual relationships, but I do not think that anybody has the slightest hope that that would have very much effect. We therefore have to accept this as a major, serious and growing problem, that none of the present methods appear to have altered the very serious and steady increase in the incidence of the disease, and decide whether there is anything further that the House can do.
One thing we could do would be to introduce legislation on the lines of Defence Regulation 33B, brought in during the war. That had two effects. It enabled medical practitioners to inform persons that they were believed to require treatment for examination, and absolved them from any danger of libel action. It also enabled the authorities, on the first notification, to inform the alleged contact that he had been so nominated and, on the second notification concerning the same person, to insist upon that person receiving examination and treatment.
Is the tracing of contacts important? I quote as typical the case of a young business man who reported to a London clinic. He arranged that a woman whose


name he gave should attend for treatment. Incidentally, asking patients themselves to ensure that someone else should attend for treatment is not a very efficient method. I can imagine a number of people who, even if they had the names, would not feel enthusiastic about going to their former girl friend and telling her they thought that they might have caught syphilis from her.
This young man arranged for his woman contact to attend for treatment. He subsequently revealed the names of nine other contacts who reported for examination, and six were discovered also to be suffering from gonorrhoea. The check continued, and four of those six were subsequently discovered to have infected one other person. From the one original case reporting for treatment no less than twelve infected cases were traced. That is the key problem, and I submit that the present methods of tracing contacts are inadequate.
The only argument I have heard against Defence Regulation 33B is that it is a breach of the traditional defence of individual liberty; that it is an infringement of the rights of the individual to insist that he or she should go for examination and treatment, and is contained in no other legislation. I regard that as pure, woolly, doctrinaire liberalism. I appreciate and will defend the freedom of individuals to preserve their liberties to the maximum extent in an organised society, but, in the light of the figures and the rate at which they are increasing, it is not sensible to suggest that a person's liberty possibly to infect other people with syphilis is something with which we should not be concerned and, since other methods have not worked, some such step as this should be carefully considered.
I hope that the Minister will tell us whether there are any other arguments than that against this proposition. I know that after the last speech I made on the subject, I was approached by a number of very respectable large organisations which said that forced treatment and inspection of this type was a monstrous infringement of the built-in rights of the individual. I am not prepared to support those rights in this respect, and if a majority of people knew

what the figures were, and the speed at which they are increasing all over the world they, too, would have some doubts about whether, in the interests of their children, they should support those rights either.
My second point is not an original one, but was raised recently at a conference at Copenhagen where were read a number of papers of considerable interest on this subject. If the dangers of venereal disease are increasing in this country and in others, is it not time that the Ministry provided facilities not only for the treatment of V.D., but for the immunisation of persons against the contraction of the disease?
I know that this suggestion will raise a storm of protest, but one of the advantages of having a good safe Parliamentary seat is that one is not so worried about a storm of protest or an issue such as this. Disregarding whether it is right or wrong, Christian or un-Christian, I think we have to accept the fact that, on the evidence, there is likely to be an increase in casual sexual relationships rather than a decrease, and in present circumstances that leads one to suppose that there will be an increase in the number of persons contracting V.D. I think we have to face that fact and provide the facilities for people who are going to take these risks—and they are a much larger proportion of the population than we are honest enough to accept—to be immunised to see whether there is something we can do to slow down the rate of increase of this complaint.
I do not want to take up any further time on this subject except to say that this one series of figures about the extent to which this is affecting children all over the country—and the figures for the London area are about the worst in the country—shows that this is becoming a bigger problem among children who, if they were the children of hon. Members, would still be at school. Indeed, some of the children concerned could be the children of hon. Members because those affected are not confined to any particular social group. I gather that a survey is now being carried out, but as far as I can establish there is no social pattern for this. There is no particular social or regional group concerned other than where there are ports and things of that sort.
If this disease is becoming as widespread and as dangerous as I think it is, the House ought to regard it as something which we must face to see whether there is a new move that we can make to alleviate what could be a dangerous threat to a large number of children who, in the overwhelming majority of cases, are not particularly wicked. They are certainly not evil children—children never are. They may be stupid and a little silly, but they run the risk of jeopardising their future and that of their unborn children. Those who object to the proposition which I have put forward as a possible method of combating this will, I hope, have some alternative proposal to make.

3.2 p.m.

The Joint Parliamentary Secretary to the Ministry of Health (Mr. Bernard Braine): In raising this afternoon the subject of the recent increase in the incidence of venereal disease the hon. Member for Greenwich (Mr. Marsh) has drawn attention to a very serious social problem, one which surely must be of concern to all responsible people. I am glad that the hon. Gentleman has done so, and I think that the House can be assured that the Government share his concern and are not in way complacent about tile present situation.
Perhaps I might first say something about the factual background to this debate. After reaching in 1946 a peak which reflected the exceptional conditions of the later years of the Second World War, the number of new cases treated in hospital clinics of infection by the principal venereal diseases, gonorrhoea and syphilis, fell steadily until 1954. Since then, I regret to say, this welcome trend has been reversed, and the number of such new cases of gonorrhoea in 1961 was more than double that in 1954. It is perhaps a hopeful sign that the figures for 1962, which are not yet published, suggest that the trend has at last been temporarily arrested. Compared with 1961, the total number of new cases of gonorrhoea fell from over 37,000 to 35,438, and of syphilis from over 4,400 to 4,120. However, there was a slight rise in the number of cases of acquired syphilis diagnosed within the first year of infection.
For the record, I should make plain that the figures quoted by the hon. Gentleman are the total number of cases attending V.D. clinics. They include cases of people found to be suffering from conditions which were not venereal disease. In 1961, a total of about 141,000 people attended clinics, but this included 75,000 with other conditions, of which 40,000 required no treatment at all.
Perhaps I could now say something about research into trends. A great deal of valuable information has been obtained by the British Co-operative Clinical Group of Venereologists who have studied cases of gonorrhoea treated each year in an increasing number of representative clinics throughout the country. Undoubtedly, the most disturbing fact emerging from their studies is the increase in gonorrhoea among young people between the ages of 15 and 24 years. Sixty-four per cent, of the female and 37 per cent, of the male cases covered by these studies in 1962 were within this age span.
The high rate of infection among these younger age groups indicated by these studies is particularly worrying, and in future the statistical returns made by all clinics direct to my Department will provide for an age break-down so that an analysis of national figures can be made. We will therefore have in future a clearer picture than we have had up to now. I entirely agree with the remarks of the hon. Member about the seriousness of the position in regard to young people. The Central Council for Health Education is carrying out an investigation into the sexual behaviour of young people, and a specialist committee of the British Medical Association has been considering the more general problems of venereal disease. We are hopeful that the results of both these studies will point to new ways of attacking the problem.
As the hon. Member has raised this question, I want to treat the House with complete frankness. A very important factor in the spread of infection is that girls or women infected with gonorrhoea often show no signs or symptoms of the disease. In fact, they may very well be unaware that they are diseased and therefore do not seek advice or treatment. If such women are promiscuous, their condition is obviously a menace


not only to themselves but to others, because they provide a pool of infection which it is most difficult to detect and treat.
I take this opportunity—and this is why I am most grateful to the hon. Gentleman for raising this matter—strongly to emphasise how important it is for anyone, man or woman, who has been exposed to any possibility of infection to go to a hospital clinic for examination and, if necessary, treatment. Whether a venereal disease has given rise to symptoms or not, its diagnosis and treatment is essential to future health. There is still a great deal of ignorance on this point, and it is dangerous ignorance.
The problem is most acute in the case of women. In past years, thousands of men have presented themselves at clinics for a check-up solely because they have been exposed to infection through promiscuity. Many fewer women have done so. In one clinic recently, out of 124 young women with no symptoms who attended simply for a check-up, 80 were found to have gonorrhoea.
I emphasise that at hospital venereal disease clinics the relationship between doctors and patients is, as would be expected, one of complete confidence. Examination and treatment are painless and the cure rapid and certain. If anyone does not know where a local clinic is, he can quite easily find out in a very simple way by ringing up the health department of the local authority or any large hospital which, if it has no clinic of its own, will know where the nearest one is to be found. I hope that the widest publicity can be given to this information.
The hon. Gentleman mentioned in passing the coloured immigrant aspect of the problem. Studies in clinics covering about 90 per cent, of all cases suggest that over half the males attending clinics are immigrants. But I think I should say that experience indicates that few immigrants bring the infection into this country. The vast majority contract the disease here after arrival. The majority of female patients are British.
Now I turn to the question which the hon. Gentleman asked me very fairly, the question of compulsion. He suggested that the problem was so serious that compulsory measures are

necessary. I am sure the House would agree that compulsory examination and treatment would be alien to our traditions and could be justified only in the most exceptional circumstances. The hon. Gentleman chose to apply to these traditions the description "pure doctrinaire liberalism".

Mr. Marsh: Woolly.

Mr. Braine: "Pure doctrinaire woolly liberalism". Well, I do hot know about that, but there are, of course, considerable practical difficulties to implementing the proposal which he has in mind. After all, we are not operating in a vacuum.
We had experience of such measures under Defence Regulation 33B between 1942 and 1947, and that experience provides no indication that compulsion would be effective. On the contrary, I am advised that it could have unfortunate consequences. Defence Regulation 33B provided for compulsory notification of suspected sources of infection when named by patients. It provided for compulsory examination of any person named as a source of infection by two or more patients and, if necessary, for that person's treatment.
I am bound to say that these powers of compulsion could seldom be applied because sources were seldom identified by more than one patient. While the Regulation was in force, contact tracing in practice continued to be based on informal voluntary action, as it had been before and as it has been since. In other words, we had experience of this during a crucial period and the existence of the Regulation did not help materially to solve the problem. The existence of the Regulation did not increase the number of contacts receiving treatment.
Moreover, and I am bound to say this in the House, the reintroduction of compulsion would impair the confidence which exists at present between doctor and patient. It would be likely, in many cases, to deter patients from attending a clinic at all and might lead to an undesirable increase in attempted self-treatment and unqualified treatment.
May I now turn to the question of immunisation.

Mr. Marsh: I am grateful to the hon. Gentleman for giving way. I am particularly disturbed, to give the classic case


of the question of compulsion. On page 62 of the Report of 1961 there is a specific reference to an incident at Holloway Prison. The number of known prostitutes admitted to the prison in 1961 was 537, and of those only 476 submitted to examination. Does not the hon. Gentleman honestly think that there is something a little absurd in a known professional prostitute being in the custody of one of Her Majesty's Prisons, an obvious person to spread venereal disease on a large scale, being permitted to refuse to be examined?

Mr. Braine: What the hon. Gentleman is now suggesting is that a specific class of person held in custody in one of Her Majesty's prisons might be subjected to compulsory examination and treatment. That is part of but a separate question from the general proposition that we should introduce compulsory measures, which were found to be ineffective before, to cover the population as a whole. On the other hand, I do not wish to rule completely out of court any suggestion that that problem might be looked at. I do not think that that argument necessarily invalidates what I have said about the broad question of compulsion.

Mr. H. Hynd: Is there not another precedent in certain parts of the Commonwealth where there is compulsory notification of leprosy?

Mr. Braine: I do not think I can go any further in this connection. Leprosy is not a condition which we have in this country. I am not saying that we cannot draw parallels or anything of that nature. I am merely saying that the general proposition that we should have compulsory powers does not, in the light of past experience, give any promise that we should be able to tackle this serious problem any more effectively than in the way in which we are now doing it.
I turn now to the question of immunisation, a very interesting suggestion made by the hon. Member for Greenwich. He is right. I believe that this suggestion was made at a health conference abroad. The clinics are able to offer an effective cure. I cannot emphasise that too much. If people who fear they may be suffering from this disease will present themselves to the clinics, an effective cure can be provided. How-

ever, on the best advice that I can obtain, the prospect of any effective immunisation seems poor. Many vaccines against gonorrhoea have been tried in the past but none has produced even temporary immunity. Apparently this is a disease which confers no natural immunity and it is possible for patients to be repeatedly infected within a short space of time. In the circumstances, it seems extremely improbable that it will be possible to devise any effective method of artificially induced immunity. The organism which causes syphilis—Treponema pallidum—has never been grown in artificial culture, and until this has been achieved there is, I am advised, no possibility of effective vaccine being prepared.
It would be appropriate at this stage to say something about what is being done at the moment to counter these diseases. Following a review of the problem of venereal disease by my right hon. Friend's Standing Medical Advisory Committee in 1960–61, an extensive programme of visits to clinics is now being undertaken by my Department. In the course of these visits improved arrangements are being discussed for tracing contacts and patients who did not complete their treatment, and the adequacy of the present clinics is also being considered in every respect. A memorandum describing the venereal disease service and the criteria for establishing a true diagnosis of venereal disease was prepared and distributed to general practitioners throughout the country in July last year.
New posters have been introduced to help local health authorities in their health education campaigns. We have given assistance to the Press in compiling articles and to the production of television programmes. I think it true to say that these have helped to focus public attention on the problem. A film version of one television programme will very soon be available through the Central Film Library. We hope to add a second film based on another recent programme.
In addition to general health education, a great deal of effort is being put into contact tracing. A physician in charge of a clinic asks his patient about possible sources of infection and any


contact who may have been infected. Patients are encouraged to ask contacts to go to the clinic for examination and medical officers of health co-operate with clinic physicians in tracing contacts where the patient cannot assist. Many local authorities employ full- or part-time social workers for this purpose.
To sum up: we rely not on compulsion but on making examination and treatment readily and conveniently available free of charge and in strict confidence. What is more, we are making treatment available which is effective. We are attempting to dispel by health education the widespread ignorance which still exists generally, with particular emphasis on the special problem of teen-agers.
I hope that our debate this afternoon will make some contribution to this end. It is of the utmost importance that those who may have been infected, and who therefore may infect others, should attend a hospital clinic for examination and any necessary treatment, which they will find there readily available. I repeat my thanks to the hon. Member for raising this subject this afternoon.

3.22 p.m.

Mr. Kenneth Robinson: I wish to add my congratulations to my hon. Friend the Member for Greenwich (Mr. Marsh) for having sought your permission, Mr. Speaker, for an Adjournment debate on a very important subject indeed. I think all of us who have followed these figures have been extremely disturbed at the serious trend of increase in these two diseases. Naturally we all very much welcome the news the Parliamentary Secretary gave this afternoon that the figures for 1962 show not perhaps an enormous, but nevertheless a marked, improvement. Of course we profoundly hope that this improvement will continue.
I was a little sorry that the Parliamentary Secretary in his opening remarks said that this is a very serious social problem, because it is by no means only—perhaps not even primarily—a social problem; it is also a medical problem. I doubt very much whether the increase in incidence of these

diseases over the period we have beer discussing is itself a measure of the increase in promiscuity among young persons or among the population generally.
I should like to know, if the Parliamentary Secretary could, with the leave of the House, answer one question, namely, the extent to which the Minister's advisers think that this increase is due to a failing of the antibiotics which have been used, indicating a renewal of strength of the organisms which cause these diseases against the antibiotics which were contributing so much. There was a time when some optimistic clinicians thought these diseases were on the way out, but they clearly seem to have got a new lease of life. One would like to know how much this is due to a weakening of the antibiotics in the struggle against syphilis and gonorrhoea.
Of the two solutions to this problem put forward by my hon. Friend, I admit that I rather prefer the second. I, too, may have a streak of woolly doctrinaire liberalism about me, but I am unenthusiastic about compulsory measures unless the situation becomes so very serious that no other solution is thought to be adequate. But I was very interested in what the Parliamentary Secretary had to say about the very minimal success of Defence Regulation 33B when it was in operation.
Although the prospects for immunisation may not be very encouraging, I very much hope that the search will go on. The doctor who attended the conference in Copenhagen—I do not know whether he was a venereologist—appeared to think that this was something which we could look forward to in the future. There is everything to be said for pressing on with research. We must look upon this as a group of serious diseases. This is how I prefer to look at them, not as some sort of inhibitor of sexual promiscuity. That aspect should be a matter for departments other than the Ministry of Health, I suggest, and, in any case, one would find it difficult to respect a moral code for which the sole basis was fear of the consequence of breaking it.
I suggest, therefore, that there is everything to be said for pressing on with research to find a vaccine or preparation for inoculation which might render


the subject immune from these diseases. I hope that the Medical Research Council will be interested in the matter. The Parliamentary Secretary was not very clear about whether his Department was doing anything to promote research. Perhaps he can tell us whether it is.

3.26 p.m.

Mr. T. L. Iremonger: Before my hon. Friend the Parliamentary Secretary asks the leave of the House, as I think lie may, to reply to some of the further points which have been made, may I ask him to include in anything he sees fit to add a rather more detailed reply to the point made by the hon. Member for Greenwich (Mr. Marsh) about action taken in prisons to deal with both men and women who may be infected or who may, perhaps, benefit from instruction and advice in this matter?
Also, with similar reference to a point about Government initiative and the responsibility of Departments, my hon. Friend referred to the use by local authorities of social workers employed by the health departments. I think that it might be helpful to the House to know exactly what they do and which authorities are helpful and which are inclined to drag their feet. There is a tendency among even very great local authorities to regard this as a subject worth thinking about and, perhaps, talking about but very difficult to do anything about. Which are the active authorities, and what are they doing?
Is my hon. Friend satisfied that his right hon. Friend the Minister of Education is fully alive to his responsibilities in this matter? The hon. Member for St. Pancras, North (Mr. K. Robinson) said that this was not a social problem so much as a medical problem. It is, of course, fundamentally a social problem, a problem of the attitude of young people to their sexual behaviour and also to the risks which they run. How far are education authorities stimulated by the Minister of Education to promote responsibility among teachers in this connection? How far do parent-teacher associations actually take the bull by the horns and do something to overcome the reticence to which the hon. Member for Greenwich referred by saying to parents, "This is something which does happen to children, to your children", warning them of the need for regular examination in appropriate cases?
If my hon. Friend could tell us something about those matters of Departmental responsibility, the House will, I think, be grateful.

3.29 p.m.

Mr. Braine: May I, by leave of the House, reply to the points made by the hon. Member for St. Pancras, North (Mr. K. Robinson) and my hon. Friend the Member for Ilford, North (Mr. Iremonger)?
This is, of course, primarily a medical problem, but it is also a very serious social problem. Neither the hon. Member for Greenwich who raised the matter nor I have sought to moralise about it. It is a problem which concerns not only physical health but the health of our society as a whole, and I was using the term "social problem" in that sense.
The hon. Member for St. Pancras, North asked about possible resistance through the use of antibiotics. I am advised that the treatment at present available at the clinics can overcome any resistance induced by antibiotics. He asked about research, and I am glad to be able to tell him that the Medical Research Council is doing research on this matter at the present time. Regarding the wider question about pressing on with research into other aspects, we may take it for granted that the Council is concerned with the whole field of research into illness. As regards vaccines, this is a matter about which obviously one must ask questions. The House may rest assured that we in the Ministry of Health shall continue to ask them. Whether one will get the answers hoped for is quite another matter. But up to date, at any rate, it has not been possible to find a vaccine which would be effective.
My hon. Friend the Member for Ilford, North took up the point which was made by the hon. Member for Greenwich about prisons. Perhaps I should have said—I take the opportunity of saying it now—that, with the Home Office, we are considering whether anything may be done by voluntary measures to bring the facts about venereal diseases more clearly to the knowledge of women and girls in prisons and Borstals so as to persuade them of the benefits of examination and treatment.
I have no evidence that local health authorities are in any way failing in their


duties. In recent months I have had the opportunity to travel to many parts of the country and to discuss health and welfare problems with local authorities. I have been struck by the efficient way in which their duties are carried out, and I have no reason to believe that local authorities are failing in vigour or enthusiasm. We give them every possible encouragement. My hon. Friend asked also about social workers. We should like to have more social workers doing this sort of work. Those that we have are actively engaged in contacting people and visiting them. Without due warning

I do not think that it is possible to go into this aspect in greater detail.
As in every other sphere of social health there is need for the utmost vigilance. I hope that this short but extremely useful debate will help to focus attention of the local health authorities and members of other organisations on what is a very serious problem and one which, as I said at the outset, must be of grave concern to us all.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Four o'clock